Anhui Gujing Distillery Company Limited
Annual Report 2020
April 2021
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Part I Important Notes, Table of Contents and DefinitionsThe Board of Directors (or the “Board”), the Supervisory Committee as well as thedirectors, supervisors and senior management of Anhui Gujing Distillery CompanyLimited (hereinafter referred to as the “Company”) hereby guarantee the factuality,accuracy and completeness of the contents of this Report and its summary, and shallbe jointly and severally liable for any misrepresentations, misleading statements ormaterial omissions therein.Liang Jinhui, the legal representative, Ye Changqing, the Chief Accountant, and ZhuJiafeng, the head of the financial department (equivalent to financial manager)hereby guarantee that the financial statements carried in this Report are factual,accurate and complete.All the Company’s directors have attended the Board meeting for the review of thisReport and its summary.Any plans for the future and other forward-looking statements mentioned in thisReport shall NOT be considered as absolute promises of the Company to investors.Investors, among others, shall be sufficiently aware of the risk and shall differentiatebetween plans/forecasts and promises. Again, investors are kindly reminded to payattention to possible investment risks.The Board has approved a final dividend plan as follows: based on the Company’stotal shares on 31 December 2020, a cash dividend of RMB15.00 (tax inclusive) per 10shares is to be distributed to the shareholders, with no bonus issue from either profitor capital reserves.This Report and its summary have been prepared in both Chinese and English.Should there be any discrepancies or misunderstandings between the two versions,the Chinese versions shall prevail.
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Part I Important Notes, Table of Contents and Definitions 2Part II Corporate Information and Key Financial Information 5Part III Business Summary 10Part IV Management Discussion and Analysis 12Part V Significant Events 34Part VI Share Changes and Shareholder Information 49Part VII Preferred Shares 56Part VIII Convertible Bonds 57Part IX Directors, Supervisors, Senior Management and Staff 58Part X Corporate Governance 68Part XI Corporate Bonds 75Part XII Financial Statements 76Part XIII Documents Available for Reference 261
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| Term | Definition |
| The “Company”, “ Gu Jing” or “we” | Anhui Gujing Distillery Company Limited inclusive of its consolidated subsidiaries, except where the context otherwise requires |
| Gujing Sales | Bozhou Gujing Sales Co., Ltd. |
| The Company as the parent | Anhui Gujing Distillery Company Limited exclusive of subsidiaries, except where the context otherwise requires |
| Gujing Group | Anhui Gujing Group Co., Ltd. |
| Yellow Crane Tower | Yellow Crane Tower Distillery Co., Ltd. |
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Part II Corporate Information and Key Financial Information
I Corporate Information
| Stock name | Gujing Distillery, Gujing Distillery-B |
| Stock code | 000596, 200596 |
| Stock exchange for stock listing | Shenzhen Stock Exchange |
| Company name in Chinese | 安徽古井贡酒股份有限公司 |
| Abbr. | 古井 |
| Company name in English (if any) | ANHUI GUJING DISTILLERY COMPANY LIMITED |
| Abbr. (if any) | GU JING |
| Legal representative | Liang Jinhui |
| Registered address | Gujing Town, Bozhou City, Anhui Province, P.R.China |
| Zip code | 236820 |
| Office address | Gujing Town, Bozhou City, Anhui Province, P.R.China |
| Zip code | 236820 |
| Company website | http://www.gujing.com |
| Email address | gjzqb@gujing.com.cn |
| Board Secretary | Securities Representative | |
| Name | Ye Changqing | Mei Jia |
| Address | Gujing Town, Bozhou City, Anhui Province, P.R.China | Gujing Town, Bozhou City, Anhui Province, P.R.China |
| Tel. | （0558）5712231 | （0558）5710057 |
| Fax | （0558）5710099 | （0558）5710099 |
| Email address | gjzqb@gujing.com.cn | gjzqb@gujing.com.cn |
| Newspapers designated by the Company for information disclosure | China Securities Journal, Shanghai Securities News, Ta Kung Pao (HK) |
| Website designated by CSRC for publication of this Report | http://www.cninfo.com.cn |
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| Place where this Report is lodged | The Board Secretary’s Office |
| Unified social credit code | 913400001519400083 |
| Change to principal activity of the Company since going public (if any) | No change |
| Every change of controlling shareholder since incorporation (if any) | No change |
| Name | RSM China |
| Office address | Suite 901-22 to 901-26, Wai Jing Mao Building (Tower 1), No. 22 Fuchengmen Wai Street, Xicheng District, Beijing, China |
| Accountants writing signatures | Chen Lianwu and Li Jiacheng |
| 2020 | 2019 | 2020-over-2019 change (%) | 2018 | |
| Operating revenue (RMB) | 10,292,064,534.41 | 10,416,961,584.23 | -1.20% | 8,686,140,336.89 |
| Net profit attributable to the listed company’s shareholders (RMB) | 1,854,576,249.29 | 2,097,527,739.86 | -11.58% | 1,695,231,643.05 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses (RMB) | 1,773,011,307.05 | 1,891,097,157.37 | -6.24% | 1,638,204,454.34 |
| Net cash generated from/used in operating activities (RMB) | 3,624,543,525.53 | 192,447,063.45 | 1,783.40% | 1,440,881,285.95 |
| Basic earnings per share (RMB/share) | 3.68 | 4.17 | -11.75% | 3.37 |
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| Diluted earnings per share (RMB/share) | 3.68 | 4.17 | -11.75% | 3.37 |
| Weighted average return on equity (%) | 19.53% | 25.55% | -6.02% | 24.03% |
| 31 December 2020 | 31 December 2019 | Change of 31 December 2020 over 31 December 2019 (%) | 31 December 2018 | |
| Total assets (RMB) | 15,186,625,708.79 | 13,871,297,363.16 | 9.48% | 12,509,928,449.72 |
| Equity attributable to the listed company’s shareholders (RMB) | 10,043,288,013.73 | 8,944,111,764.44 | 12.29% | 7,601,984,024.58 |
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| Q1 | Q2 | Q3 | Q4 | |
| Operating revenue | 3,281,368,602.79 | 2,238,252,397.83 | 2,549,799,986.43 | 2,222,643,547.36 |
| Net profit attributable to the listed company’s shareholders | 636,788,443.69 | 388,148,160.67 | 512,744,399.70 | 316,895,245.23 |
| Net profit attributable to the listed company’s shareholders before exceptional gains and losses | 635,613,633.02 | 372,305,235.50 | 493,142,445.93 | 271,949,992.60 |
| Net cash generated from/used in operating activities | 1,632,664,980.49 | 708,973,120.15 | 238,222,085.94 | 1,044,683,338.95 |
| Item | 2020 | 2019 | 2018 | Note |
| Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) | -3,692,640.09 | -7,615,741.56 | -10,060,019.55 | |
| Government subsidies charged to current profit or loss (exclusive of government subsidies given in the Company’s ordinary course of business at fixed quotas or amounts as per the government’s uniform standards) | 48,617,479.37 | 98,293,177.32 | 36,041,674.45 | |
| Gain or loss on fair-value changes in trading financial assets and liabilities & investment income from disposal of trading financial assets and liabilities and available-for-sale financial assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of business) | 21,490,043.05 | 144,234,319.52 | 18,653,228.80 | |
| Reversed portion of impairment allowance for accounts receivable which are tested individually for impairment | 43,554.94 | 0.00 | 0.00 | |
| Non-operating income and expense other than the above | 44,100,616.61 | 57,215,092.96 | 32,375,890.89 | |
| Less: Income tax effects | 27,033,395.22 | 71,418,613.38 | 18,150,068.72 |
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| Non-controlling interests effects (net of tax) | 1,960,716.42 | 14,277,652.37 | 1,833,517.16 | |
| Total | 81,564,942.24 | 206,430,582.49 | 57,027,188.71 | -- |
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Part III Business SummaryI Principal Activity of the Company in the Reporting Period
The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.(I) Pricipal Activity of the CompanyThe Company primarily produces and markets liquor and spirits.(II) Status of the Industry and Position of the Company in the Industry
1. Status of the Liquor and Spirits Industry
Since the beginning of the 21st century, China's liquor and spirits industry has experienced three development stages. Before 2012,with rapid economic growth, the income of urban and rural residents rose fast, and the demand for liquor and spirits continued toincrease, while production and sales of liquor and spirits continuously expanded at a fast pace. As a result, the liquor and spiritsindustry witnessed booming supply and demand. During that period, national liquor and spirits brands and local regional renownedliquor enterprises achieved rapid development. In the context of the rise in both the demand and price of liquor and spirits, the salesincome and total profits of liquor enterprises increased quickly.From the second half of 2012 to 2016, China's economy once again entered a period of adjustment, as the Chinese governmentintroduced a string of policies to restrict the spending on official overseas visits, official vehicles and official hospitality, such as the"Eight-point Decision" and "Six Prohibitions", which include restrictions on the consumption of high-end alcohol with public funds.Consumption scenarios such as commercial consumption and government consumption were limited, leading to a drop in consumerdemand in a short time. Moreover, liquor prices were under huge pressure. China's liquor and spirits industry entered a period ofprofound adjustment. After 2012, both the output growth and income growth of China's liquor and spirits industry slowed down.The liquor and spirits industry began to recover in the second half of 2016, with a rise in consumption demand by end-users,propelling the growth of the overall income and profits of the industry. Since 2017, the overall demand and price of liquor and spiritshave increased, and the recovery of mid- and high-end liquor and spirits has picked up. In the future, benefiting from theconsumption upgrade and the change of consumption concept, the growth of sub-high-end liquor and spirits will be the key driver forthe development of the liquor and spirits industry. The consumption upgrade is the major driving force for the development of theliquor and spirits industry. Liquor enterprises need to fully grasp the great opportunities from the extensive consumption upgrade andstrive to better meet the consumption needs of the market through quality improvement, market segmentation and product innovationand other means, so as to advance the transformation and upgrade of the product structure.
2. Position of the Company in the Industry
China has a long history of liquor. There are a large number of liquor production enterprises in the country, but the regionaldistribution of liquor consumers is particularly evident. The liquor and spirits industry is characterized by full competition, with ahigh degree of marketization. The market competition is fierce, and the industry adjustments are constantly deepening. In the nationalmarket, the competitive edges of the enterprises come from their brand influence, product style and marketing & operation models. Ina single regional market, the competitive strengths of the enterprises depend on their brand influence in the region, the recognition ofthe companies by regional consumers and comprehensive marketing capacity.As one of China’s traditional top eight liquor brands, the Company is the first listed liquor and spirits company with both A and Bstocks. It is located in Bozhou City, Anhui Province in China, the hometown of historic figures Cao Cao and Hua Tuo, as well as oneof the world’s top 10 liquor-producing areas. No changes have occurred to the main business of the Company in the Reporting Period.
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As the main product of the Company, the Gujing spirit originated as a “JiuYunChun Spirit”, together with its making secrets, beingpresented as a hometown specialty by Cao Cao, a famous warlord in China’s history, to Emperor Han Xiandi (name: Liu Xie) in A.D.196, and was continually presented to the royal house since then. With crystalline liquid, rich aroma, a fine flavor and a lingeringaftertaste, the Gujing spirit has helped the Company win four national distilled spirit golden awards, a golden award at the 13th SIALParis, the title of China’s “Geographical Indication Product”, the recognition as a “Key Cultural Relics Site under the StateProtection”, the recognition with a “National Intangible Cultural Heritage Protection Project”, a Quality Award from the Anhuiprovincial government, a title of “National Quality Benchmark”, among other honors. In 2020, Gujing Distillery ranked fourth inChina's liquor and spirits industry with a brand value of RMB197,136 million in the "Hua Liquor Cup" (list of Chinese liquor brandsby value).In April 2016, Gujing gongjiu signed a strategic cooperation agreement with Huanghelou Liquor Co., Ltd., opening a new era ofcooperation in China's famous liquor industry. Yellow Crane Tower Baijiu is the only famous Chinese liquor in Hubei. Its uniquestyle is "soft, mellow, elegant and cool, and has a long lingering fragrance". It won the two China gold medal in liquor appreciation in1984 and 1989. At present, Huanghelou liquor industry has three bases: Wuhan, Xianning and Suizhou. Among them, HuanghelouLiquor Culture Expo Park in Wuhan base has been approved as national AAA scenic spot, and Huanghelou forest wine town inXianning base has been approved as national AAA scenic spot.II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Not applicable.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness AnalysisNo material changes occurred to the Company’s core competitiveness in the Reporting Period.
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Part IV Management Discussion and Analysis
I Overview
In 2020, in the wake of the outbreak of COVID-19, the economy encountered numerous challenges, and consumer demand cameunder pressure. The liquor and spirits industry experienced a shift from structural recovery to high-quality development. In the faceof all the changes and challenges, under the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,the Company comprehensively implemented the spirit of the 19th CPC National Congress and the Second, Third, Fourth and FifthPlenary Sessions of the 19th CPC Central Committee, and thoroughly implemented the principles, policies, decisions andarrangements of the provincial and municipal governments. The Company took effective pandemic control measures and ensuredsmooth resumption of work and production, while upholding its values of "Be Honest, Offer Quality Liquor, Be Stronger and BeHelpful to the Society". It further advanced the “Liquor and Spirits 5.0” strategy in order to achieve the goal of becoming anenterprise with “digital and global operations and law-based management”.For 2020, the Company recorded operating revenue of RMB10.292 billion, down 1.20% compared to 2019; a gross profit ofRMB2.474 billion, down 13.89% year on year; a net profit attributable to the Company as the parent of RMB1.855 billion,decreasing 11.58% from the year earlier; earnings per share of RMB3.68, 11.75% lower than 2019; and net cash generated fromoperating activities of RMB3.625 billion, going up 1,783.40% on a year-on-year basis.(I) The overall operating status of the Company during the Reporting Period
1. Expanding market presence, with progress in optimizing both product structure and brandThe Company focused on promoting its “sub-high-end products nationwide”, enhanced brand building, and placed emphasis onbuilding IP through the Spring Festival Gala. It pushed forward its brand revitalization project and continuously optimized productand market structures.
2. Enhancing product quality, with steady improvement in product quality
The Company continued to optimize brewing process, thus steadily raising product quality. It made new achievements intechnological innovation. It conducted in-depth study and continued efforts to boost the production of aged liquor products. Onetechnological research achievement was recognized as “internationally leading” achievement by the Science and TechnologyAchievement Evaluation Center of Anhui Association of Scientists and Entrepreneurs, and one technological research project wonthe second prize of the Science and Technology Innovation Progress Award from China Institute of Food Science and Technology in2020. The Company was honored as "National Liquor Industry Quality Leader" and "National Quality & Integrity Award forExcellent Enterprise".
3. Continuing to promote balanced production, with greater online and offline integrationThe Company ceaselessly pursued balanced production by implementing forecast-based production, quarterly balanced production,and flexibly adjustment with the aim of effectively dealing with unforeseeable changes. It fostered the integration of digitaltechnology and business operation, opened up more channels, empowered the business frontline, and achieved online and offlineintegration and interconnectivity. It independently built a platform that provides data analysis for areas from day-to-day managementto strategic decision-making to digitize management.
4. Optimizing organizational structure to stimulate organizational vitality
The Company optimized organizational structure and refined assessment mechanism, thereby further stimulating organizationalvitality. The points system assessment has been fully implemented to quantify work performance. In addition, the Company steadilyadvanced internal market-oriented reform to vitalize mechanisms.
5. Strictly abiding by environmental protection requirements to improve environmental managementThe Company completed the systematic screening and inspection of rain and sewage pipe network and fire protection pipe network
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in the plants, addressed deficiencies, and drew clear and accurate pipe network maps to further enhance refined management. Thus,the foundation of safety and environmental protection has been consolidated. The environmental monitoring indicators reached thestandards in the year, and the "four zero" production safety targets were accomplished.
6. Strengthening the leading role of Party building and carrying out warning educationAll the Party members and managers were engaged in the "Three Cases" warning education. Party organizations at all levelsconscientiously studied the classic work titled Xi Jinping: The Governance of China to constantly enhance their ideologicalunderstanding and political awareness. All units, on the basis of their business operations, strengthened General Secretary Xi's"Seven Capacities" requirements for young cadres. In-depth activities about "transformation, reform, and strength" were conducted todrive steady and sustained growth of the Company.
7. During the Reporting Period, the Company still had the following pressures and inadequacies
(1) The COVID-19 pandemic has brought many uncertainties to the development of the liquor industry.
(2) The level of lean management of the Company falls behind the pace of the Company’s development.
(3) The system, mechanism and the vitality of the Company need to be further activated.
(4) Bold innovation is required in cultivating talents, inspiring talents, and retaining talents by system.The Company is subject to the Guideline No. 14 of the Shenzhen Stock Exchange on Information Disclosure by Industry—for ListedCompanies Engaging in Food and Liquor & Wine Production.The Company primarily produces and markets liquor and spirits. Its principal product series are “Aged Original Liquor Series”,“Gujinggong Liquor Series”, and “Yellow Crane Tower Liquor Series”. Key representative products are Aged Original LiquorTribute, Gu 5, Gu 7 Chinese Flavor, Gu 8, Gu 16, Gu 20, Gu 26, Yellow Crane Tower Aged 1979, Fragrant. The Company focuses oncultivating 30-Year Aged Original Liquor product, which has been rolled out in some core markets such as the Yangtze River Delta,and terminal channels and publicity expenses also cover the product.
The Company's Principal Product System
| Principal product series | Key representative products |
| Aged Original Liquor Series | Gu 26, Gu 20, Gu 16, Gu 8, Gu 5, and Tribute. Positioned as a high-end, sub-high-end, and middle-end product series, Aged Original Liquor represents the key direction of the Company's structural adjustment, and its main consumption scenarios are high-end business, family, daily drinking, and banquet settings. |
| Gujing Liquor Series | Gujing Liquor V9, Gujing Liquor V6, Gujing Liquor 6th Gen, and Gujing Light Bottle. Positioned as a mid/low-priced product series, Gujing Liquor Series is an effective supplement to Aged Original Liquor Series, and its main consumption scenarios are banquets in some urban areas/towns and holiday gifts. |
| Yellow Crane Tower Liquor Series | Fragrant 900, Aged 1979, Ecological 15, and Floor Series-5 Floor. With a focus on the market of Hubei Province, the product series forges a synergy with the Company's original brand in a dual-brand matrix. |
| By | Operating revenue | Cost of sales | Gross profit margin | YoY change in | YoY change in | YoY change in |
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| operating revenue (%) | cost of sales (%) | gross profit margin (%) | ||||
| Channel | ||||||
| Online | 375,683,415.01 | 91,975,831.73 | 75.52% | 22.69% | 18.33% | 0.90% |
| Offline | 9,916,381,119.40 | 2,457,839,113.03 | 75.21% | -1.92% | 4.66% | -1.56% |
| Subtotal | 10,292,064,534.41 | 2,549,814,944.76 | 75.23% | -1.20% | 5.10% | -1.49% |
| By | Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) |
| Product series | ||||||
| Aged Original Liquor | 7,834,409,317.74 | 1,449,460,369.87 | 81.50% | 6.52% | 17.00% | -1.66% |
| Gujinggong Liquor | 1,379,872,550.29 | 548,635,455.88 | 60.24% | -4.10% | 12.30% | -5.81% |
| Yellow Crane Tower | 422,020,863.06 | 132,596,303.20 | 68.58% | -52.97% | -44.58% | -4.75% |
| Subtotal | 9,636,302,731.09 | 2,130,692,128.95 | 77.89% | -0.56% | 8.34% | -1.82% |
| Segment | Increase | Decrease | Ending number |
| North China | 240 | 105 | 846 |
| South China | 144 | 59 | 380 |
| Central China | 476 | 259 | 2,157 |
| International | 3 | 0 | 8 |
| Total | 863 | 423 | 3,391 |
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) | Ending accounts receivable |
| 1 | Customer A | 582,892,501.77 | 5.66% | 0.00 |
| 2 | Customer B | 512,614,881.07 | 4.98% | 0.00 |
| 3 | Customer C | 346,031,974.08 | 3.36% | 0.00 |
| 4 | Customer D | 259,758,068.23 | 2.52% | 0.00 |
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| 5 | Customer E | 116,828,739.55 | 1.14% | 0.00 |
| Total | 1,818,126,164.70 | 17.66% | 0.00 | |
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 268,181,822.99 | 11.11% |
| 2 | Supplier B | 157,379,083.76 | 6.52% |
| 3 | Supplier C | 104,820,780.12 | 4.34% |
| 4 | Supplier D | 86,519,388.40 | 3.58% |
| 5 | Supplier E | 66,040,893.35 | 2.74% |
| Total | 682,941,968.62 | 28.29% | |
| Purchase contents | Purchase model | Amount (RMB’0,000) | |
| 1 | Raw materials | Base cultivation | 14,222.22 |
| Tendering purchasing | 79,809.95 | ||
| 2 | Packing materials | Tendering purchasing | 147,361.32 |
| Total | 241,393.49 | ||
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coordinated according to the production schedule and inventory with a view to ensuring timely delivery of products.Commissioned production
□ Applicable √ Not applicable
Breakdown of cost of sales
| Item | 2020 | 2019 | Change (%) | ||
| Cost of sales (RMB) | As % of total cost of sales | Cost of sales (RMB) | As % of total cost of sales | ||
| Direct materials | 1,857,491,476.93 | 72.85% | 1,807,661,503.73 | 74.51% | 2.76% |
| Direct labor cost | 261,553,817.02 | 10.26% | 214,328,787.10 | 8.83% | 22.03% |
| Manufacturing expenses | 201,171,173.25 | 7.89% | 147,018,800.80 | 6.06% | 36.83% |
| Fuels | 89,428,707.39 | 3.51% | 88,898,827.47 | 3.66% | 0.60% |
| Total | 2,409,645,174.59 | 94.50% | 2,257,907,919.10 | 93.07% | 6.72% |
| Main product | Output | Sales volume | inventory | YoY changes of output | YoY changes of sales volume | YoY changes of inventory |
| Aged Original Liquor Series | 39,804.91 | 42,620.78 | 6,536.88 | -9.88% | 3.99% | -30.11% |
| Gujinggong Liquor Series | 22,325.13 | 22,628.54 | 2,078.20 | 3.18% | 7.56% | -12.74% |
| Yellow Crane Tower Liquor Series | 5,461.69 | 4,579.75 | 1,614.94 | -35.86% | -47.28% | 120.32% |
| Other series | 16,076.72 | 17,101.61 | 495.58 | -17.46% | -12.77% | -67.41% |
| Category | Ending quantity |
| Finished liquor | 10,725.60 |
| Semi-product (including base liquor) | 151,894.82 |
| Production subject | Designed capacity | Actual capacity | Capacity in progress |
| Finished liquor | 115,000 | 83,668 | 130,000 |
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II Core Business Analysis
1. Overview
See relevant contents of “I Overview” in “Management Discussion and Analysis”, herein
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
| 2020 | 2019 | Change (%) | |||
| Operating revenue | As % of total operating revenue (%) | Operating revenue | As % of total operating revenue (%) | ||
| Total | 10,292,064,534.41 | 100% | 10,416,961,584.23 | 100% | -1.20% |
| By operating division | |||||
| Manufacturing | 10,292,064,534.41 | 100.00% | 10,416,961,584.23 | 100.00% | -1.20% |
| By product category | |||||
| Distilled spirits | 10,074,148,990.37 | 97.88% | 10,164,144,471.76 | 97.57% | -0.89% |
| Hotel services | 63,321,699.07 | 0.62% | 88,659,455.17 | 0.85% | -28.58% |
| Other | 154,593,844.97 | 1.50% | 164,157,657.30 | 1.58% | -5.83% |
| By operating segment | |||||
| North China | 692,953,553.05 | 6.73% | 557,017,590.00 | 5.35% | 24.40% |
| Central China | 9,015,585,004.98 | 87.60% | 9,326,923,639.55 | 89.54% | -3.34% |
| South China | 579,972,219.24 | 5.64% | 520,685,208.39 | 5.00% | 11.39% |
| Overseas | 3,553,757.14 | 0.03% | 12,335,146.29 | 0.11% | -71.19% |
| Operating revenue | Cost of sales | Gross profit margin | YoY change in operating revenue (%) | YoY change in cost of sales (%) | YoY change in gross profit margin (%) | |
| By operating division | ||||||
| Manufacturing | 10,292,064,534.41 | 2,549,814,944.76 | 75.23% | -1.20% | 5.10% | -1.49% |
| By product category | ||||||
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| Distilled spirits | 10,074,148,990.37 | 2,409,645,174.59 | 76.08% | -0.89% | 6.72% | -1.71% |
| Hotel services | 63,321,699.07 | 33,232,823.83 | 47.52% | -28.58% | -16.43% | -7.63% |
| Other | 154,593,844.97 | 106,936,946.34 | 30.83% | -5.83% | -16.70% | 9.03% |
| By operating segment | ||||||
| North China | 692,953,553.05 | 189,295,280.34 | 72.68% | 24.40% | 2.70% | 5.77% |
| Central China | 9,015,585,004.98 | 2,209,383,295.89 | 75.49% | -3.34% | 6.97% | -2.36% |
| South China | 579,972,219.24 | 149,169,111.71 | 74.28% | 11.39% | -12.56% | 7.04% |
| Overseas | 3,553,757.14 | 1,967,256.82 | 44.64% | -71.19% | -65.14% | -9.62% |
| Operating division | Item | Unit | 2020 | 2019 | Change (%) |
| Distilled spirits brewage | Sales volume | Ton | 86,930.68 | 90,318.85 | -3.75% |
| Output | Ton | 83,668.45 | 93,798.87 | -10.80% | |
| Inventory | Ton | 10,725.60 | 13,987.83 | -23.32% |
| Operating division | Item | 2020 | 2019 | Change (%) | ||
| Cost of sales | As % of total cost of sales (%) | Cost of sales | As % of total cost of sales (%) | |||
| Food manufacturing | Direct materials | 1,857,491,476.93 | 72.85% | 1,807,661,503.73 | 74.51% | 2.76% |
| Food manufacturing | Direct labor cost | 261,553,817.02 | 10.26% | 214,328,787.10 | 8.83% | 22.03% |
| Food manufacturing | Manufacturing expenses | 201,171,173.25 | 7.89% | 147,018,800.80 | 6.06% | 36.83% |
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| Food manufacturing | Fuels | 89,428,707.39 | 3.51% | 88,898,827.47 | 3.66% | 0.60% |
| Total sales to top five customers (RMB) | 1,818,126,164.70 |
| Total sales to top five customers as % of total sales of the Reporting Period (%) | 17.66% |
| Total sales to related parties among top five customers as % of total sales of the Reporting Period (%) | 0.00% |
| No. | Customer | Sales revenue contributed for the Reporting Period (RMB) | As % of total sales revenue (%) |
| 1 | Customer A | 582,892,501.77 | 5.66% |
| 2 | Customer B | 512,614,881.07 | 4.98% |
| 3 | Customer C | 346,031,974.08 | 3.36% |
| 4 | Customer D | 259,758,068.23 | 2.52% |
| 5 | Customer E | 116,828,739.55 | 1.14% |
| Total | -- | 1,818,126,164.70 | 17.66% |
| Total purchases from top five suppliers (RMB) | 682,941,968.62 |
| Total purchases from top five suppliers as % of total purchases of the Reporting Period (%) | 28.29% |
| Total purchases from related parties among top five suppliers as % of total purchases of the Reporting Period (%) | 0.00% |
~ 20 ~
Information about top five suppliers:
| No. | Supplier | Purchase in the Reporting Period (RMB) | As % of total purchases (%) |
| 1 | Supplier A | 268,181,822.99 | 11.11% |
| 2 | Supplier B | 157,379,083.76 | 6.52% |
| 3 | Supplier C | 104,820,780.12 | 4.34% |
| 4 | Supplier D | 86,519,388.40 | 3.58% |
| 5 | Supplier E | 66,040,893.35 | 2.74% |
| Total | -- | 682,941,968.62 | 28.29% |
| 2020 | 2019 | Change (%) | Reason for any significant change | |
| Selling expense | 3,120,977,163.32 | 3,184,894,221.10 | -2.01% | |
| Administrative expense | 802,201,580.48 | 685,280,546.45 | 17.06% | |
| Finance costs | -260,836,456.07 | -97,625,803.51 | 167.18% | The main reason is the increase of interest income. |
| R&D expense | 40,590,136.46 | 42,373,017.33 | -4.21% |
| Item | 2020 | 2019 | Change (%) | Reason |
| Employment benefits | 723,874,977.05 | 539,175,110.66 | 34.26% | The main reason is the increase of salaries of sales companies. |
| Travel fees | 133,511,390.56 | 133,377,266.84 | 0.10% | |
| Advertisement fees | 840,407,171.96 | 876,445,646.88 | -4.11% | |
| Transportation charges | 0.00 | 52,250,930.23 | -100.00% | The main reason is that the transportation charges were turned into the item of cost of sales to account as required by the new standards governing revenue. |
| Comprehensive promotion costs | 755,941,972.88 | 969,501,572.71 | -22.03% | |
| Service fees | 578,401,082.92 | 516,683,260.54 | 11.95% | |
| Others | 88,840,567.95 | 97,460,433.24 | -8.84% | |
| Total | 3,120,977,163.32 | 3,184,894,221.10 | -2.01% |
~ 21 ~
| No. | Main way | Amount (RMB’0,000) |
| 1 | TV | 41,581.11 |
| 2 | Offline | 31,754.05 |
| 3 | Online | 10,705.56 |
| Total | 84,040.72 | |
| 2020 | 2019 | Change (%) | |
| Number of R&D personnel | 1,014 | 938 | 8.10% |
| R&D personnel as % of total employees | 10.21% | 9.69% | 0.52% |
| R&D expense (RMB) | 300,404,769.73 | 269,107,374.89 | 11.63% |
| R&D expense as % of operating revenue | 2.92% | 2.58% | 0.34% |
| Capitalized R&D expense (RMB) | 0.00 | 0.00 | 0.00 |
| Capitalized R&D expense as % of total R&D expense | 0.00% | 0.00% | 0.00% |
| Item | 2020 | 2019 | Change (%) |
| Subtotal of cash generated from operating activities | 13,919,228,342.47 | 12,080,069,939.92 | 15.22% |
| Subtotal of cash used in operating activities | 10,294,684,816.94 | 11,887,622,876.47 | -13.40% |
| Net cash generated from/used in operating activities | 3,624,543,525.53 | 192,447,063.45 | 1,783.40% |
~ 22 ~
| Subtotal of cash generated from investing activities | 372,197,845.63 | 4,138,301,120.12 | -91.01% |
| Subtotal of cash used in investing activities | 603,414,750.96 | 1,466,159,130.60 | -58.84% |
| Net cash generated from/used in investing activities | -231,216,905.33 | 2,672,141,989.52 | -108.65% |
| Subtotal of cash generated from financing activities | 130,665,500.00 | 0.00 | -- |
| Subtotal of cash used in financing activities | 831,838,344.55 | 755,400,000.00 | 10.12% |
| Net cash generated from/used in financing activities | -701,172,844.55 | -755,400,000.00 | 7.18% |
| Net increase in cash and cash equivalents | 2,692,153,775.65 | 2,109,189,052.97 | 27.64% |
| 31 December 2020 | 31 December 2019 | Change in percentage (%) | Reason for any significant change | |||
| Amount | As % of total assets | Amount | As % of total assets | |||
| Monetary assets | 5,971,212,569.66 | 39.32% | 5,619,749,918.09 | 40.51% | -1.19% | |
| Accounts receivable | 67,933,735.91 | 0.45% | 40,776,567.96 | 0.29% | 0.16% | |
| Inventories | 3,416,880,808.96 | 22.50% | 3,015,051,961.78 | 21.74% | 0.76% | |
| Investment | 4,392,943.54 | 0.03% | 4,710,086.02 | 0.03% | 0.00% | |
~ 23 ~
| property | ||||||
| Long-term equity investments | 4,915,575.83 | 0.03% | 4,678,282.24 | 0.03% | 0.00% | |
| Fixed assets | 1,797,789,271.62 | 11.84% | 1,722,572,998.79 | 12.42% | -0.58% | |
| Construction in progress | 279,169,201.60 | 1.84% | 183,984,816.07 | 1.33% | 0.51% | |
| Short-term borrowings | 70,665,500.00 | 0.47% | 0.00 | 0.00% | 0.47% | |
| Long-term borrowings | 60,117,638.89 | 0.40% | 0.00 | 0.00% | 0.40% |
| Item | Beginning amount | Gain/loss on fair-value changes in the Reporting Period | Cumulative fair-value changes charged to equity | Impairment allowance for the Reporting Period | Purchased in the Reporting Period | Sold in the Reporting Period | Other changes | Ending amount |
| Financial assets | ||||||||
| 1. Held-for-trading financial assets (excluding derivative financial assets) | 509,031,097.02 | -19,983,181.51 | 23,000,000.00 | 308,170,000.00 | 203,877,915.51 | |||
| Subtotal of financial assets | 509,031,097.02 | -19,983,181.51 | 23,000,000.00 | 308,170,000.00 | 203,877,915.51 | |||
| Total of the above | 509,031,097.02 | -19,983,181.51 | 23,000,000.00 | 308,170,000.00 | 203,877,915.51 | |||
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |||
| Item | Ending carrying value (RMB) | Reason for restriction |
~ 24 ~
| Monetary assets | 334,308,875.92 | Structured deposits and time deposits that cannot be withdrawn in advance and time deposits that are pledged for issuing bank acceptance drafts |
| Accounts receivable financing | 104,530,000.00 | A pledge is used to issue a banker's acceptance draft |
| Total | 438,838,875.92 |
~ 25 ~
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
| Variety of securities | Code of securities | Name of securities | Initial investment cost | Accounting measurement model | Beginning carrying value | Gain/loss on fair value changes in the Reporting Period | Cumulative fair value changes charged to equity | Purchased in the Reporting Period | Sold in the Reporting Period | Gain/loss in the Reporting Period | Ending carrying value | Accounting title | Source of funds |
| Fund | DAPU Asset Management | 200,000,000.00 | Fair value method | 211,884,505.24 | -8,006,589.73 | 18,134,786.60 | 203,877,915.51 | Held-for-trading financial assets | Self-owned funds | ||||
| Other ending holding securities | -- | -- | |||||||||||
~ 26 ~
| investments | |||||||||||
| Total | 200,000,000.00 | -- | 211,884,505.24 | -8,006,589.73 | 18,134,786.60 | 203,877,915.51 | -- | -- | |||
| Disclosure date of the announcement about the board’s consent for the securities investment | The Company held the 14th Meeting of the 8th Board of Directors on 24 April 2020, reviewed and approved the proposal on carrying out securities investment business | ||||||||||
| Disclosure date of the announcement about the general meeting’s consent for the securities investment (if any) | N/A | ||||||||||
| Operator | Relationship with the Company | Connected transaction | Type of derivative | Initial investment amount | Starting date | Ending date | Beginning investment amount | Purchased in the Reporting Period | Sold in the Reporting Period | Impairment provision (if any) | Ending investment amount | Proportion of closing investment amount in the Company’s ending net assets | Actual gain/loss in the Reporting Period |
| Reverse repurchase of national debt | Naught | No | Reverse repurchase of national debt | 0.00 | 29 April 2020 | 11 October 2020 | 0.00 | 4,179.80 | 4,179.80 | 0.00 | 0.00 | 0.00% | 2.38 |
~ 27 ~
| Total | 0.00 | -- | -- | 0.00 | 4,179.80 | 4,179.80 | 0.00 | 0.00 | 0.00% | 2.38 |
| Capital source for derivative investment | Company’s own funds | |||||||||
| Lawsuits involved (if applicable) | N/A | |||||||||
| Disclosure date of board announcement approving derivative investment (if any) | 30 August 2013 | |||||||||
| Disclosure date of shareholders’ meeting announcement approving derivative investment (if any) | ||||||||||
| Analysis of risks and control measures associated with derivative investments held in the Reporting Period (including but not limited to market risk, liquidity risk, credit risk, operational risk, legal risk, etc.) | The Company had controlled the relevant risks strictly according to the Derivatives Investment Management System. | |||||||||
| Changes in market prices or fair value of derivative investments during the Reporting Period (fair value analysis should include measurement method and related assumptions and parameters) | Naught | |||||||||
| Significant changes in accounting policies and specific accounting principles adopted for derivative investments in the Reporting Period compared to previous reporting period | Naught | |||||||||
| Opinion of independent directors on derivative investments and risk control | Based on the sustainable development of the main business and the sufficient free idle money, the Company increased the profits through investing in the reasonable financial derivative instruments, which was in favor of improving the service efficiency of the idle funds; in order to reduce the investment risks of the financial derivative instruments, the Company had set up corresponding supervision mechanism for the financial derivative instrument business and formulated reasonable accounting policy as well as specific principles of financial accounting; the derivative Investment business developed separately took national debts as mortgage object, which was met with the cautious and steady risks management principle and the interest of the Company and shareholders. Therefore, agreed the Company to develop the derivative Investment business of reverse repurchase of national debt not more than the limit of RMB0.3 | |||||||||
~ 28 ~
billion.
5. Use of Funds Raised
□ Applicable √ Not applicable
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
| Company name | Relationship with the Company | Main business scope | Registered capital | Total assets | Net assets | Operating revenues | Operating profit | Net profit |
| Bozhou Gujing Sales Co., Ltd | Subsidiary | Wholesales of distilled spirit, | 84,864,497.89 | 3,296,066,876.59 | 130,451,839.30 | 9,734,502,823.14 | 822,294,018.85 | 615,919,496.60 |
~ 29 ~
| construction materials, feeds and assistant materials | ||||||||
| Anhui Longrui Glass Co., Ltd | Subsidiary | Manufacture and sale of glass products | 86,660,268.98 | 390,279,052.27 | 326,378,245.39 | 262,854,620.63 | 50,897,638.90 | 42,920,898.20 |
| Yellow Crane Tower Wine Industry Co., Ltd | Subsidiary | Production and sales of distilled spirit | 400,000,000.00 | 1,120,174,942.77 | 541,393,135.58 | 516,045,801.88 | -18,849,867.04 | -11,717,450.63 |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | Subsidiary | Hotel management and house lease | 54,000,000.00 | 194,641,077.86 | 76,977,257.87 | 55,836,365.97 | 5,520,893.97 | 3,395,552.44 |
| The name of the company | Acquisition and disposal of subsidiaries during the reporting period | The impact on the overall production operation and performance |
| Hubei Xinjia Testing Technology Co., Ltd. | Set up | Optimize the internal management structure and enhance the internal driving force. |
| Anhui Jiudao Culture Media Co., Ltd. | Set up | Optimize the internal management structure and enhance the internal driving force. |
~ 30 ~
| Anhui Color Taste Wine Co., Ltd. | Cancel |
~ 31 ~
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects(I) Development Prospect of the Industry the Company is in
1. The consumption upgrade trend has been evident, and the awareness of healthy drinking has increasedWith the continuous growth of the income and consumption power of urban and rural residents in China, the purchasing power ofordinary consumers has been increasing, so does the number of wealthy people. People's consumption capacity and structure areexpected to further enhance. Consumers' demand for better brands and quality has been stronger year by year, and the concept offood consumption has changed from the essential demand for quantity and diverse product mix to longing for great safety and health.
2. The product structure has been upgraded, with an increase in the share of medium and high-end liquor and spiritsAfter the liquor and spirits industry has experienced rounds of big adjustments. Driven by the wave of consumption upgrade and thedevelopment of high-end well-known liquor and spirits, the high-end and sub-high-end liquor and spirits brands with powerfulstrength have become the first to achieve recovery, and the demand for mid- and high-end liquor and spirits has been increasing.High-end and sub-high-end have contributed more to the product revenue of famous liquor enterprises, and their profitability hasenhanced. Furthermore, low-end liquor and spirits have come under mounting pressure and facing severe challenges from overalladjustments to the product structure. The sales proportion of mid- and high-end liquor and spirits has been expanding. Thus, therenowned liquor brands with great influence and strong production capacity are expected to benefit from the upgrading of the productstructure.
3. With the escalation of industry competition, industrial concentration will further rise
China's liquor and spirits industry is moving faster to transform from an expanding market to a competitive market, and a “MatthewEffect” has become evident. The stronger has become stronger, and the recovery pace has varied from company to company. Inaddition, there is a trend that powerful brands with good product quality, great culture and specific places of origin take a largermarket share, indicating that the concentration of the liquor and spirits industry is likely to grow further.(II) Development Strategy of the Company
1. Firmly boost "Strategy 5.0, Five-Star Operation” Strategy
Comprehensively fulfill Strategy 5.0 and have the "User-Centered" thought fully and deeply implemented in the Company. Solidlycreate the "Five-Star Operation", enhance competitive force, improve quality and efficiency, optimize services and promote healthyand efficient operation of the enterprise.
2. Firmly boost reform and innovation strategy
Deeply boost marketing innovation, technological innovation and mechanism innovation and generate endogenous power of theenterprise.
3. Firmly create “Talent Highland” strategy
Intensify talent recruitment and attraction and establish flexible talent attraction and wisdom experience borrowing mechanism.Innovate talent training mode and promote independent cultivation & development and absorption & attraction simultaneously.(III) Operating Revenue Plan of the Company in 2021In 2021, the Company plans to achieve an operating revenue of RMB12.0 billion, rising16.59% compared with that of last year; andachieve a total profit of RMB2.847 billion, rising15.08% compared with that of last year.(IV) Operating Risk of the Company
1. The adverse effect of the systematic risk in macro-economic environment on the development of the industry and the Company.
2. Impact of industrial policy adjustment and change on the sustainable development of the Company.
~ 32 ~
3. Impact of normalization of COVID-19 epidemic on the consumption behaviors and habits.(V) Operating Measures
1. Marketing
The Company accelerated efforts to promote its “sub-high-end products nationwide” by strengthening its presence in all provincesand regions, expanding market share and customer base, and launching more individual products and outlets. As for brand building,the Company focused on increasing advertising and offline secondary promotion on CCTV, provincial satellite TV stations, theInternet and new media outlets. To expand international market, it actively participated in major international events to promote itsbrand and products.
2. Product Management
In adherence to the “quality first” principle, the Company enhanced the spirit of craftsmen and awareness of quality and took solidactions to carry forward the Nie Guangrong Spirit in Gujing. It furthered the deep integration of technical quality and liquorproduction, continuously carried out optimization research on production process concerning liquor making and yeast making, andfurther optimized liquor making production technology. It conducted in-depth special inspection of quality management,strengthened the handling of production process and market feedback, and effectively exercised closed-loop management. Upholdingthe green brewing principle, the Company continued to make procurement from raw grain base. Besides, it continued to adopt the"strategic cooperation + grain base planting" model.
3. Engineering Construction
The Company accelerated the construction of the smart technology transformation project (smart park) for liquor production, andadhered to high standards and high quality to promote the construction of smart park projects.
4. Informatization Construction
It accelerated the digital transformation and intensified the application and promotion of digital means. It actively pushed forwardprojects such as the integration of industry and financial resources, while ensuring effective technical undertaking to further speed upthe digital transformation and upgrading of Gujing.
5. Human Resource
Based on the demands of the Company’s strategic development, the Company continuously optimized the channels for talentsintroduction, further improved talent structure and salary structure; strengthened the orientation of performance appraisal,continuously innovated performance management model; incessantly cemented talent echelon construction, conducted talent trainingand cultivation in a comprehensive, multidimensional and targeted way.
6. Internal Management
The Company regularly carried out special actions to "change work style, change methods, and strengthen implementation", raisedideological understanding and political position, listened to the opinions of grass-roots business lines, ensured steady progress inwork in strict accordance with the policies and the law, and actively cemented inter-departmental coordination and collaboration. TheCompany actively guided managers to emancipate their minds, organized more training and study programs, thought outside the box,and adopted creative ways to address problems.
7. Corporate Culture Construction
The Company upheld strict governance over the Party and strengthened party spirit education as per strict standards and requirementsto establish and carry forward excellent work style. Work style was into routine management. Actions were taken against unhealthytendencies in a bid to create a culture featuring pragmatic thinking, simple life, and solid work style. The Company should continueto strengthen the leadership team’s construction, temper the core team of “loyalty and cleanness”; continue to carry out warningeducation on integrity, and further build an ideological line of defense against corruption; continue to rectify formalism, bureaucracy,and “laziness, randomness, fatigue, glibness and complacency” and dogmatism, cultivate pragmatic and rigorous work style of cadresand employees; continue to strengthen ideological and political work, maintain the main position of cultural propaganda andideological work; continue to strengthen the leadership of Party building, and gather the strong power of the revolution.
~ 33 ~
In 2021, the Company will continue to be guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Eraand thoroughly implement the spirit of the 19th CPC National Congress and the Second, Third, Fourth and Fifth Plenary Sessions ofthe 19th CPC Central Committee. Under the strong leadership of the Bozhou Municipal CPC Committee and Municipal Government,the Company will firmly keep in alignment, boost the morale, strengthen the execution capacity, deeply practice the socialist corevalues, and uphold its values of "Be Honest, Offer Quality Liquor, Be Stronger and Be Helpful to the Society". It will advocate andadhere to long-term perspective mindset, pursue excellence, produce high-quality products, maintaining strategic resolve, enhancecorporate management, work harder, and take concrete actions. It will strive to seek steady progress based on civilized managementand technological advances and become an enterprise with “digital and global operations and law-based management”.X Communications with the Investment Community such as Researches, Inquiries andInterviews
1. During the Reporting Period
□ Applicable √ Not applicable
~ 34 ~
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revisedin the Reporting Period:
√ Applicable □ Not applicable
The 2019 Annual General Meeting held on 19 June 2020 reviewed and approved the Company’s Interest Distribution Scheme in2019 that based on the total shares of 503,600,000 of the Company on 31 December 2019, cash dividends was distributed atRMB15.00 per 10 shares (tax inclusive), and the total cash dividends distributed was RMB755,400,000.00 (tax inclusive).
| Special statement about the cash dividend policy | |
| In compliance with the Company’s Articles of Association and resolution of general meeting | Yes |
| Specific and clear dividend standard and ratio | Yes |
| Complete decision-making procedure and mechanism | Yes |
| Independent directors faithfully performed their duties and played their due role | Yes |
| Non-controlling interests are able to fully express their opinion and desire and their legal rights and interests are fully protected | Yes |
| In case of adjusting or changing the cash dividend policy, the conditions and procedures involved are in compliance with applicable regulations and transparent | No adjustments or changes |
| Year | Cash dividends (tax inclusive) (A) | Net profit attributable to ordinary shareholders of the listed company in consolidated | A as % of B (%) | Cash dividends in other forms (such as share repurchase) (C) | C as % of B (%) | Total cash dividends (including those in other forms) (D) | D as % of B (%) |
~ 35 ~
| statements for the year (B) | |||||||
| 2020 | 755,400,000.00 | 1,854,576,249.29 | 40.73% | 0.00 | 0.00% | 755,400,000.00 | 40.73% |
| 2019 | 755,400,000.00 | 2,097,527,739.86 | 36.01% | 0.00 | 0.00% | 755,400,000.00 | 36.01% |
| 2018 | 755,400,000.00 | 1,695,231,643.05 | 44.56% | 0.00 | 0.00% | 755,400,000.00 | 44.56% |
| Bonus issue from capital reserves for every 10 shares (share) | 0 |
| Dividend for every 10 shares (RMB) (tax inclusive) | 15.00 |
| Bonus issue from profit for every 10 shares (share) | 0 |
| Total shares as the basis for the final dividend plan (share) | 503,600,000 |
| Total cash dividends (RMB) (tax inclusive) | 755,400,000.00 |
| Cash dividends in other ways (such as share repurchase) (RMB) | 0.00 |
| Total cash bonus (including other methods) (RMB) | 755,400,000.00 |
| Distributable profits (RMB) | 7,465,059,972.22 |
| Percentage of cash dividends to the total distributed profits | 100% |
| Particulars about the cash dividends | |
| If the Company is in a mature development stage and has plans for any significant expenditure, in profit allocation, the ratio of cash dividends in the profit allocation shall be 40% or above. | |
| Details of final dividend plan for the Reporting Period | |
| The Company intends to distribute RMB15 (tax included) per 10 shares based on the total number of shares at the end of the year, totaling RMB755,400,000.00. This year does not send bonus, does not transfer to increase capital stock with accumulation fund. | |
~ 36 ~
| Commitment | Promisor | Type of commitment | Details of commitment | Date of commitment making | Term of commitment | Fulfillment |
| Commitments made in acquisition documents or shareholding alteration documents | Anhui Gujing Distillery Company Limited | Performance commitment | The Company promised that Yellow Crane Tower Distillery Co., Ltd. would realize the operating revenue of RMB1,700.5625 million (tax inclusive) and the net profit margin would be not lower than 11.00% in 2020. | 29 April 2016 | Y2017-Y2021 | Not fulfilled in 2020 |
| Fulfilled on time | No | |||||
| Specific reasons for failing to fulfill commitments on time and plans for next step (if any) | Before and after the Spring Festival in 2020, the COVID-19 pandemic occurred and spread to many places across China (hereinafter referred to as the "pandemic"), and all provinces and municipalities successively launched the highest level of response for major public health emergencies. Hubei Province, where Yellow Crane Tower locates, was materially adversely affected by the pandemic. Annual performance: Revenue stood at RMB583,131,800, down 55.27% year on year. Due to the force majeure of the COVID-19 pandemic, market trading activities were seriously affected, resulting in part of the terms of the original agreement unable to be fulfilled on schedule. To this end, upon consultation by all parties, the Supplementary Agreement on Equity Transfer was entered into. For the commitments in respect of net sales interest rate, net sales profit and expected distributable profit of Yellow Crane Tower, the assessment period has been extended by one year from the execution date of the Supplementary Agreement. In other words, the year 2020 will not be regarded as the assessment year, and 2021 will be taken as the fourth assessment year and 2022 as the fifth assessment year. | |||||
| Period | Y2017 | Y2018 | Y2019 | Y2020 | Y2021 |
~ 37 ~
| Committed operating revenue (tax inclusive) | 80,500.00 | 100,625.00 | 130,812.50 | 170,056.25 | 204,067.50 |
| Item | Actual amount | Promised amount | Difference | Completion rate |
| Operating revenue (tax inclusive) | 58,313.18 | 170,056.25 | -111,743.07 | 34.29% |
| Net profit | -1,171.75 | 16,554.15 | -17,725.90 | Defective |
| Net profit ratio | -2.27% | 11.00% | -13.27% | Defective |
| Period | Y2017 | Y2018 | Y2019 | Y2020 | Y2021 | Y2022 |
| Committed operating revenue (tax inclusive) (RMB’0,000) | 80,500.00 | 100,625.00 | 130,812.50 | —— | 170,056.25 | 204,067.50 |
~ 38 ~
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its RelatedParties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.V Explanations Given by the Board of Directors, the Supervisory Board and the IndependentDirectors (if any) Regarding the Independent Auditor's “Modified Opinion” on the FinancialStatements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√ Applicable □ Not applicable
| Contents and reasons | Approval procedures | Notes |
| On 5 July 2017, the Ministry of Finance issued the Notice on Revising and Issuing the Accounting Standards for Business Enterprises No.14-Revenue (CK(2017)No.22 and required those enterprises both listed in domestic and aboard and those enterprises overseas listed with International Financial Reporting Standards or Accounting Standards for Business Enterprises for preparation of financial statements to implement it since 1 January 2018, required other domestically listed enterprises to implement it since 1 January 2020 and required non-listed enterprises carrying out the Accounting Standards for Business Enterprises to implement it since 1 January 2021. The Company starts to implement the new accounting policy since the date stipulated in above document and starts to implement the new standards governing revenue since 1 January 2020. | Reviewed and approved on the 14th Meeting of the 8th Board of Directors and the 11th Meeting of the 8th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn dated 27 April 2020. |
| The Ministry of Finance issued the Notice on Revising and Issuing of Formats of 2019 Financial Statements for General Enterprises (CK[2019]No.16) (hereinafter referred to as “Revising Notice”) on 19 | Reviewed and approved on the 14th Meeting of the 8th Board of Directors and the 11th Meeting of the 8th Supervisory Committee | For details, please refer to the announcement on changes in accounting policies disclosed on http://www.cninfo.com.cn dated 27 April 2020. |
~ 39 ~
September 2019, in which the formats offinancial statements for general enterprisesare revised and non-financial enterprisescarrying out accounting standards forbusiness enterprises are required to preparethe financial statements for 2020 andsubsequent periods in accordance withprovisions stipulated in accountingstandards for business enterprises and theRevising Notice.
VII Retrospective Restatements due to Correction of Material Accounting Errors in theReporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
| Name of subsidiary | Principal place of business | Registered place | Nature of the business | stake（%） | Make way | |
| Directly | Indirect | |||||
| Anhui Jiudao Culture Media Co., Ltd. | Hefei, Anhui | Hefei, Anhui | Advertisement marketing | 100.00 | Incorporation through investment | |
| Hubei Xinjia Testing Technology Co., Ltd. | Xianning, Hubei | Xianning, Hubei | Food testing | 51.00 | Incorporation through investment | |
| Name of the domestic independent auditor | RSM Certified Public Accountants (LLP) |
| The Company’s payment to the domestic independent auditor (RMB’0,000) | 155 |
| How many consecutive years the domestic independent auditor has provided audit service for the Company | 2 |
| Names of the certified public accountants from the domestic independent auditor writing signatures on the | Chen Lianwu, Li Jiacheng |
~ 40 ~
| auditor’s report | |
| How many consecutive years the certified public accountants have provided audit service for the Company | 1 |
~ 41 ~
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
~ 42 ~
No such cases in the Reporting Period.
2. Major Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management during the Reporting Period
Unit: RMB’0,000
| Specific type | Capital resources | Amount incurred | Undue Balance | Overdue unrecovered amount |
| Trust financial products | Self-owned funds | 0.00 | 0.00 | 0.00 |
| Bank financial products | Self-owned funds | 2,300 | 0.00 | 0.00 |
| Broker financial products | Self-owned funds | 0.00 | 0.00 | 0.00 |
| Others | Self-owned funds | 20,000 | 20,000 | 0.00 |
| Total | 22,300 | 20,000 | 0.00 | |
| Name of the trustee | Type of the trustee | Type of the product | Amount | Capital resource | Start date | End date | Use of fund | Determination method of remuneration | Annual yield for reference | Estimate profit (if any) | Amount of actual profit or loss in Reporting Period | Actual recovery of profit or loss in Reporting Period | Allowance for impairment (if any) | Legal procedures or not | Plan for entrusted asset management in the future or not | Overviews of events and query index (if any |
| DAPU Asset Management | Limited Liability Company | Fund | 20,000 | Self-owned funds | Purchasing new shares offline, products with | 1.2% of products’ net value and 20% of excess earnings | 7.00% | 1,813.48 | Recovered | Yes | Yes |
~ 43 ~
| fixed earnings, reverse repurchase of national debt, and etc. | ||||||||||||||
| Total | 20,000 | -- | -- | -- | -- | -- | -- | 1,813.48 | -- | -- | -- | -- |
~ 44 ~
end of December 2020.
(2) Summary of the Related Work Done in the Reporting Period
① The Company visited and helped 168 poor households. By uniformly purchasing 168 Chinese New Year gifts, the Companyarranged 87 persons in charge of assistance to send the gifts to the 168 poor households. The gifts were not only confined to rice,spring couplets, festive liquor, lotus root and lotus root juice, but also including a sincere New Year blessing;
② The Company carried out the “Warm the Young with Love, Help the Young Realize Their Dreams” activity to care for youngpeople with difficulties. The Gujing Group Labor Union and the Youth League Committee respectively went to the threeadministrative villages (Yanglou, Bali, and Wuma) in Wuma Town, and collected the “small wishes” of the poor young teenagers.And on 7 February 2020, they sent coats, school bags and “love gift packages” to help teenagers to “realize their dream”, and sentblessing and encouraged them to grow up healthily;
③ In response to the call of the Bozhou Municipal CPC Committee and Municipal Government, the Company, under the spirit ofthe Notice for Provincial Trade Unions to Carry out Anti-pandemic Consumption Actions against Poverty and Implementation Planof Bozhou City for Consumption Poverty Alleviation Month, purchased 33,000 kg of moon cakes worth RMB1,097,000 from Yi WenXiang Dessert Store, helping promote the sales of agro-products of poor households and contributing to securing a decisive victory inpoverty alleviation.
(3) Subsequent Plans
① The Company launched a campaign in which 87 responsible persons were assigned to “pay return visits to villages and relatedhouseholds”, during which, they, according to the spirit of the Fifth Plenary Session of the 19th CPC Central Committee, discussedchanges and made development plans with the village cadres and the people, with a view to helping the poor people to solvedifficulties. The efforts were acclaimed by the people.
② The Company was kept posted on the poverty alleviation progress, effectively communicated the spirit of Document B.F.Z.[2020] No. 14. In the meanwhile, the Company took the lead in poverty alleviation in accordance with the requirements of theOrganization Department of the Municipal CPC Committee and the Municipal Poverty Alleviation Bureau. The Group's 87responsible persons contributed to full accomplishment of the poverty alleviation task.
③ Absorb aspiring youths in poverty and enlarge employment poverty alleviation and relief. Connect to three positioned assistanceand support villages and two stationed villages actively, absorb aspiring youths in poverty or children of households in poverty towork in the Company, and widen the income increase channels of households in poverty.
④ The Company carried out "One Lesson, One Area One Practice" activities to facilitate poverty alleviation. Pursuant to therelevant requirements of the Organization Department of Bozhou Municipal Party Committee's Eight Measures Concerning PovertyAlleviation with Companies Responsible for Villages and Individual Responsible for Households, Gujing Group organized a series ofcharacteristic activities in creative ways based on its actual work conditions.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protectionauthorities.Yes
| Name of polluter | Name of major pollutants | Way of discharge | Number of discha | Distribution of discharge | Discharge concentration | Discharge standards implemented | Total discharge | Approved total discharge | Excessive dischar |
~ 45 ~
| rge outlets | outlets | ge | |||||||
| Anbui Gujing Distillery Co., Ltd. | COD | Directly discharge | 3 | Headquarter plant Zhangji plant Gujing plant | 41.52mg/L 32.39mg/L 26.46mg/L | Headquarter≦100mg/L Zhangji≦100mg/L Gujing≦50mg/L | Headquarter: 58.74t Zhangji: 5.78t Gujing: 22.41t | Headquarter: 116.0596t Zhangji: 26.504t Gujing: 105.916t | Naught |
| Anbui Gujing Distillery Co., Ltd. | NH3-N | Directly discharge | 3 | Headquarter plant Zhangji plant Gujing plant | 0.72mg/L 0.69mg/L 0.28mg/L | Headquarter≦10mg/L Zhangji≦10mg/L Gujing≦5mg/L | Headquarter: 1.02t Zhangji: 0.12t Gujing: 0.24t | Headquarter: 11.606t Zhangji: 2.6504t Gujing: 10.5916t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Total phosphorus | Directly discharge | 3 | Headquarter plant Zhangji plant Gujing plant | 0.04mg/L 0.05mg/L 0.02mg/L | Headquarter≦1mg/L Zhangji≦1mg/L Gujing≦0.5mg/L | Headquarter: 0.05t Zhangji: 0.01t Gujing: 0.02t | Headquarter: 1.16t Zhangji: 0.265t Gujing: 1.0592t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Total nitrogen | Directly discharge | 3 | Headquarter plant Zhangji plant Gujing plant | 6.10mg/L 3.32mg/L 5.42mg/L | Headquarter≦20mg/L Zhangji≦20mg/L Gujing≦15mg/L | Headquarter: 8.63t Zhangji: 0.59t Gujing: 4.59t | Headquarter: 23.2119t Zhangji: 5.3008t Gujing: 21.1832t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Smoke | Organized discharge through chimney | 3 | Headquarter plant Zhangji plant Gujing plant | 1.97mg/m? 1.00mg/m? 1.92mg/m? | Headquarter≦10mg/m? Zhangji≦20mg/m? Gujing≦10mg/m? | Headquarter: 1.02t Zhangji: 0.02t Gujing: 0.53t | Headquarter: 5.01t Zhangji: / Gujing: 4.301t | Naught |
| Anbui Gujing Distillery Co., Ltd. | Sulfur Dioxide | Organized discharge through chimney | 3 | Headquarter plant Zhangji plant Gujing plant | 7.78mg/m? 0.79mg/m? 4.21mg/m? | Headquarter≦35mg/m? Zhangji≦50mg/m? Gujing≦35mg/m? | Headquarter: 4.01t Zhangji: 0.02t Gujing: 1.17t | Headquarter: 17.536t Zhangji: / Gujing: 15.055t | Naught |
| Anbui Gujing | Nitrogen oxide | Organized | 3 | Headquarter plant | 20.68mg/m? 34.93mg/m? | Headquarter≦50mg/m? | Headquarter: 10.67t | Headquarter: 25.051t | Naught |
~ 46 ~
| Distillery Co., Ltd. | discharge through chimney | Zhangji plant Gujing plant | 7.05mg/m? | Zhangji≦150mg/m? Gujing≦50mg/m? | Zhangji: 0.84t Gujing: 1.96t | Zhangji: 10.318t Gujing: 21.506t | |||
| Anhui Longrui Glass Co., Ltd | Smoke | Organized discharge through chimney | 2 | No. 1 furnace, No. 2 furnace | 1.8mg//m? 1.98mg//m? | No. 1 furnace≦10mg/m? No. 2 furnace≦10mg/m? | No. 1 furnace: 0.31t No. 2 furnace: 0.05t | / | Naught |
| Anhui Longrui Glass Co., Ltd | Sulfur Dioxide | Organized discharge through chimney | 2 | No. 1 furnace, No. 2 furnace | 10.8mg/m? 28.9mg/m? | No. 1 furnace≦50mg/m? No. 2 furnace≦50mg/m? | No. 1 furnace: 1.89t No. 2 furnace: 0.87t | / | Naught |
| Anhui Longrui Glass Co., Ltd | Nitrogen oxide | Organized discharge through chimney | 2 | No. 1 furnace, No. 2 furnace | 52.5mg/m? 81.6mg/m? | No. 1 furnace≦200mg/m? No. 2 furnace≦200mg/m? | No. 1 furnace: 9.19t No. 2 furnace: 2.47t | / | Naught |
~ 47 ~
non-catalytic reduction + SCR Denitrification by catalytic reduction + Wet electrostatic precipitator, and discharge of flue gas meetsthe super-low discharge requirements (smoke ≤10mg/m
, SO2≤35mg/m
, NOx≤50mg/m
).
(2) The boilers at Zhangji Plant under Anhui Gujing Distillery Company Limited are gas-fired boilers with low-nitrogen combustion,and waste gas is discharged through the 20-meter-tall exhaust funnel, of which and discharge of flue gas meets the requirements forcoal-fired boiler in Table 3 of GB13271-2014 Emission Standard of Air Pollutants for Industrial Kiln and Furnace (smoke ≤20mg/m
,SO2≤50mg/m
, NOx≤150mg/m
).
(3) Furnace 3# of Anhui Longrui Glass Co., Ltd. has been shut down, and Furnace 1# and Furnace 2# have undergone a coal-to-gastransformation and now operate stably. Both Furnace 1# and Furnace 2# adopt the process of "bag dedusting + dry desulfurization +low nitrogen + SCR low-temperature denitrification". When the standard is reached, the gas from Furnace 1# is discharged by 45meters high exhaust tube, and the gas from Furnace 2# is discharged by 50 meters high exhaust tube. The flue gas emissions allconform to the emission requirements (smoke dust ≤ 10mg/m3; SO2 ≤ 50mg/m3; NOx ≤ 200 mg/m3) set forth in the TechnicalGuidelines for the Formulation of Emergency Emission Reduction Measures in Heavy Pollution Weather and Key Industries.
(4) The Headquarter of Anhui Gujing Distillery Company Limited and Gujing Branch finished product coding machine exhaust gastreatment facilities are operating well. By adopting photocatalytic oxidation technology, the Company’s flue gas emissions complywith the Table 1 standard requirements of DB12/524-2014 Emission Standard for Industrial Enterprises Volatile Organic Compounds.
(5) The Headquarters of Anhui Gujing Distillery Company Limited and the odor treatment facilities of Zhangji Sewage Station areoperating well. By adopting technologies like photocatalytic oxidation and activated carbon adsorption, and the Company’s emissionof exhaust gas meets the requirements of Table 2 of the Standard for Emission of Pollutants.In 2020, the environment protection facilities of Anhui Gujing Distillery Company Limited and its subsidiaries ran normally ingeneral, main pollutants can achieve up-to-standard discharge, environment information is opened to the public normally, and theyhave performed their social responsibilities properly.Environmental impact assessment of construction project and other administrative license situation in respect ofenvironmental protection
| No. | Item | Category of EIA | EIA approval (filing) time | EIA approval (filing) number |
| 1 | Intelligent Technical Transformation Project of Liquor Production of Anhui Gujing Distillery Co., Ltd. | Environment affection report | 10 January 2020 | BHB [2020] No. 1 |
| 2 | Upgrading renovation project of sewage treatment station in Gujing Plant of Anhui Gujing Distillery Company Limited | Environment affection form | 29 April 2020 | BHB [2020] No. 7 |
| 3 | Environmental Protection Facilities Improvement Project of Liquor Furnace 1# of Anhui Longrui Glass Co., Ltd. | Environment affection form | 15 July 2020 | BHB [2020] No. 14 |
| 4 | Technological transformation project of automatic inspection line for unprocessed grain | Environment affection registration form | 11 June 2020 | 202034160200000209 |
| 5 | Gujinggong Liquor·Aged Original Liquor Theme Hotel Project | Environment affection registration form | 10 July 2020 | 20203416000100000068 |
~ 48 ~
Emergency plan for sudden environment affairsThe Company has formulated the Emergency Plan of Anhui Gujing Distillery Company Limited for Sudden Environmental PollutionAccident and the Emergency Plan of Anhui Longrui Glass Co., Ltd for Sudden Environmental Pollution Accident, which have beenfiled with Bureau of Ecology and Environment of Bozhou. Emergency plan drill has been carried out according to relevantrequirements.Environmental self-monitoring schemeThe Company has formulated the Self-Monitoring Scheme of Anhui Gujing Distillery Company Limited and the Self-MonitoringScheme of Anhui Longrui Glass Co., Ltd, and published them on the website of Department of Ecology and Environment of AnhuiProvince.Other environment information that should be disclosedNaughtOther related environment protection informationNaught
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
~ 49 ~
Part VI Share Changes and Shareholder InformationI. Share Changes
1. Share Changes
Unit: share
| Before | Increase/decrease in the Reporting Period (+/-) | After | |||||||
| Shares | Percentage (%) | New issues | Shares as dividend converted from profit | Shares as dividend converted from capital reserves | Other | Subtotal | Shares | Percentage (%) | |
| I. Restricted shares | 0 | 0.00% | 0 | 0.00% | |||||
| II. Non-restricted shares | 503,600,000 | 100.00% | 503,600,000 | 100.00% | |||||
| 1 RMB ordinary shares | 383,600,000 | 76.17% | 383,600,000 | 76.17% | |||||
| 2 Domestically listed foreign shares | 120,000,000 | 23.83% | 120,000,000 | 23.83% | |||||
| III. Total shares | 503,600,000 | 100.00% | 503,600,000 | 100.00% | |||||
~ 50 ~
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
| Number of ordinary shareholders | 31,247 | Number of ordinary shareholders at the month-end prior to the disclosure of this Report | 32,830 | Number of preferred shareholders with resumed voting rights (if any) (see note 8) | 0 | Number of preferred shareholders with resumed voting rights at the month-end prior to the disclosure of this Report (if any) (see note 8) | 0 | |||||||
| 5% or greater shareholders or top 10 shareholders | ||||||||||||||
| Name of shareholder | Nature of shareholder | Shareholding percentage | Total shares held at the period-end | Increase/decrease in the Reporting Period | Restricted shares held | Non-restricted shares held | Shares in pledge or frozen | |||||||
| Status | Shares | |||||||||||||
| ANHUI GUJING GROUP COMPANY LIMITED | State-owned legal person | 53.89% | 271,404,022 | 271,404,022 | In pledge | 114,000,000 | ||||||||
| GAOLING FUND,L.P. | Foreign legal person | 2.47% | 12,446,408 | 12,446,408 | ||||||||||
| AGRICULTURAL BANK OF | Other | 1.84% | 9,244,356 | 9,244,356 | ||||||||||
~ 51 ~
| CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | ||||||||
| CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD | Foreign legal person | 1.83% | 9,192,938 | 9,192,938 | ||||
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | Foreign legal person | 1.40% | 7,048,161 | 7,048,161 | ||||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID SECURITIES INVESTMENT FUND | Other | 1.37% | 6,902,366 | 6,902,366 | ||||
| CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD. | State-owned legal person | 1.30% | 6,543,600 | 6,543,600 | ||||
| HONG KONG SECURITIES CLEARING COMPANY LTD. | Foreign legal person | 1.27% | 6,396,310 | 6,396,310 | ||||
| BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES LIQUOR INDEX | Other | 1.22% | 6,160,769 | 6,160,769 |
~ 52 ~
| CLASSIFICATION SECURITIES INVESTMENT FUND | ||||||||
| GREENWOODS CHINA ALPHA MASTER FUND | Foreign legal person | 0.92% | 4,614,326 | 4,614,326 | ||||
| Strategic investor or general legal person becoming a top-10 ordinary shareholder due to rights issue (if any) (see note 3) | N/A | |||||||
| Related or acting-in-concert parties among the shareholders above | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | |||||||
| Top 10 non-restricted shareholders | ||||||||
| Name of shareholder | Non-restricted shares held at the period-end | Shares by type | ||||||
| Type | Shares | |||||||
| ANHUI GUJING GROUP COMPANY LIMITED | 271,404,022 | RMB ordinary share | 271,404,022 | |||||
| GAOLING FUND,L.P. | 12,446,408 | Domestically listed foreign stock | 12,446,408 | |||||
| AGRICULTURAL BANK OF CHINA- E FUND CONSUMPTION SECTOR STOCK SECURITIES INVESTMENT FUND | 9,244,356 | RMB ordinary share | 9,244,356 | |||||
| CHINA INT'L CAPITAL CORP HONG KONG SECURITIES LTD | 9,192,938 | Domestically listed foreign stock | 9,192,938 | |||||
| UBS (LUX) EQUITY FUND - CHINA OPPORTUNITY (USD) | 7,048,161 | Domestically listed foreign stock | 7,048,161 | |||||
| INDUSTRIAL AND COMMERCIAL BANK OF | 6,902,366 | RMB ordinary | 6,902,366 | |||||
~ 53 ~
| CHINA LIMITED- INVESCO GREAT WALL EMERGING GROWTH HYBRID SECURITIES INVESTMENT FUND | share | ||
| CENTRAL HUIJIN ASSET MANAGEMENT CO., LTD. | 6,543,600 | RMB ordinary share | 6,543,600 |
| HONG KONG SECURITIES CLEARING COMPANY LTD. | 6,396,310 | RMB ordinary share | 6,396,310 |
| BANK OF CHINA-CHINA MERCHANTS CHINA SECURITIES LIQUOR INDEX CLASSIFICATION SECURITIES INVESTMENT FUND | 6,160,769 | RMB ordinary share | 6,160,769 |
| GREENWOODS CHINA ALPHA MASTER FUND | 4,614,326 | Domestically listed foreign stock | 4,614,326 |
| Related or acting-in-concert parties among top 10 unrestricted public shareholders, as well as between top 10 unrestricted public shareholders and top 10 shareholders | Among the shareholders above, the Company’s controlling shareholder—Anhui Gujing Group Company Limited—is not a related party of other shareholders; nor are they parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. As for the other shareholders, the Company does not know whether they are related parties or whether they belong to parties acting in concert as defined in the Administrative Measures on Information Disclosure of Changes in Shareholding of Listed Companies. | ||
| Top 10 ordinary shareholders involved in securities margin trading (if any) (see note 4) | N/A | ||
| Name of controlling shareholder | Legal representative/person | Date of establishment | Unified social credit code | Principal activity |
~ 54 ~
| in charge | ||||
| ANHUI GUJING GROUP COMPANY LIMITED | Liang Jinhui | 16 January 1995 | 91341600151947437P | Making beverage, construction materials and plastic products, etc. |
| Controlling shareholder’s holdings in other listed companies at home or abroad in the Reporting Period | As of 31 December 2020, the controlling shareholder ANHUI GUJING GROUP COMPANY LIMITED directly holds 98,558,300 shares of Huaan Securities Co., Ltd. owning the proportion of shares of 2.72%. | |||
| Name of actual controller | Legal representative/person in charge | Date of establishment | Unified social credit code | Principal activity |
| State-owned Assets Supervision and Administration Commission of the People’s Government of Bozhou | N/A | N/A | N/A | N/A |
| Other listed companies at home or abroad controlled by the actual controller in the Reporting Period | N/A | |||
~ 55 ~
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
~ 56 ~
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
~ 57 ~
Part VIII Convertible bonds
□ Applicable √ Not applicable
No convertible corporate bonds in the Reporting Period.
~ 58 ~
Part IX Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
| Name | Office title | Incumbent/Former | Gender | Age | Start of tenure | End of tenure | Beginning shareholding (share) | Increase in the Reporting Period (share) | Decrease in the Reporting Period (share) | Other increase/decrease (share) | Ending shareholding (share) |
| Liang Jinhui | Chairman of the Board | Incumbent | Male | 55 | 19 June 2020 | 18 June 2023 | |||||
| Li Peihui | Director | Incumbent | Male | 48 | 19 June 2020 | 18 June 2023 | |||||
| Zhou Qingwu | Director, GM | Incumbent | Male | 47 | 19 June 2020 | 18 June 2023 | |||||
| Yan Lijun | Director, Executive Deputy GM | Incumbent | Male | 48 | 19 June 2020 | 18 June 2023 | |||||
| Xu Peng | Director, Deputy GM | Incumbent | Male | 51 | 19 June 2020 | 18 June 2023 | |||||
| Ye Changqing | Director, Deputy GM, Chief Accountant, Secretary of the Board | Incumbent | Male | 47 | 19 June 2020 | 18 June 2023 | |||||
| Zhang Guiping | Independent director | Incumbent | Male | 70 | 19 June 2020 | 18 June 2023 | |||||
| Wang Ruihua | Independent director | Incumbent | Male | 59 | 19 June 2020 | 18 June 2023 | |||||
| Xu | Independen | Incumbent | Male | 45 | 19 | 18 |
~ 59 ~
| Zhihao | t director | June 2020 | June 2023 | ||||||||
| Sun Wanhua | Chairman of Supervisory Committee | Incumbent | Male | 56 | 19 June 2020 | 18 June 2023 | |||||
| Yang Xiaofan | Supervisor | Incumbent | Male | 54 | 19 June 2020 | 18 June 2023 | |||||
| Wang Zibin | Employee supervisor | Incumbent | Male | 51 | 19 June 2020 | 18 June 2023 | |||||
| Lu Duicang | Supervisor | Incumbent | Male | 41 | 19 June 2020 | 18 June 2023 | |||||
| Zhang Bo | Employee supervisor | Incumbent | Male | 56 | 19 June 2020 | 18 June 2023 | |||||
| Zhang Lihong | Deputy GM | Incumbent | Male | 53 | 19 June 2020 | 18 June 2023 | |||||
| Zhu Xianghong | Deputy GM | Incumbent | Male | 47 | 19 June 2020 | 18 June 2023 | |||||
| Gao Jiakun | Deputy GM | Incumbent | Male | 51 | 19 June 2020 | 18 June 2023 | |||||
| Li Anjun | Deputy GM | Incumbent | Male | 51 | 28 August 2020 | 18 June 2023 | |||||
| Kang Lei | GM assistant | Incumbent | Male | 43 | 28 August 2020 | 18 June 2023 | |||||
| Zhu Jiafeng | GM assistant | Incumbent | Male | 44 | 28 August 2020 | 18 June 2023 | |||||
| Total | -- | -- | -- | -- | -- | -- |
~ 60 ~
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
| Name | Office title | Type | Date | Reason |
| Liang Jinhui | Chairman of the Board | Elected | 19 June 2020 | General election |
| Li Peihui | Director | Elected | 19 June 2020 | General election |
| Zhou Qingwu | Director, GM | Elected, appointed | 19 June 2020 | General election |
| Yan Lijun | Director, Executive Deputy GM | Elected, appointed | 19 June 2020 | General election |
| Xu Peng | Director, Deputy GM | Elected, appointed | 19 June 2020 | General election |
| Ye Changqing | Director, Deputy GM, Chief Accountant, Secretary of the Board | Elected, appointed | 19 June 2020 | General election |
| Zhang Guiping | Independent director | Elected | 19 June 2020 | General election |
| Wang Ruihua | Independent director | Elected | 19 June 2020 | General election |
| Xu Zhihao | Independent director | Elected | 19 June 2020 | General election |
| Sun Wanhua | Chairman of Supervisory Committee | Elected | 19 June 2020 | General election |
| Yang Xiaofan | Supervisor | Elected | 19 June 2020 | General election |
| Lu Duicang | Supervisor | Elected | 19 June 2020 | General election |
| Wang Zibin | Employee supervisor | Elected | 19 June 2020 | General election |
| Zhang Bo | Employee supervisor | Elected | 19 June 2020 | General election |
| Zhang Lihong | Deputy GM | Appointed | 19 June 2020 | General election |
| Zhu Xianghong | Deputy GM | Appointed | 28 August 2020 | Job change |
| Gao Jiakun | Deputy GM | Appointed | 28 August 2020 | Job change |
| Li Anjun | Deputy GM | Appointed | 28 August 2020 | Job change |
~ 61 ~
| Kang Lei | GM assistant | Appointed | 28 August 2020 | Job change |
| Zhu Jiafeng | GM assistant | Appointed | 28 August 2020 | Job change |
| Wang Gao | Independent director | Left for expiration of term | 19 June 2020 | General election |
| Song Shuyu | Independent director | Left for expiration of term | 19 June 2020 | General election |
~ 62 ~
Secretary of Board of Directors of the Company. He had ever acted as Chief Auditor of Audit Department, Vice Manager of AuditDepartment and Vice Supervisor and Supervisor of Auditing& Supervision Department; and Supervisor of the 4
thSupervisoryCommittee of the Company; Director and Secretary of the 5
th
, 6th, 7th
and 8thBoard of Directors, and Chief Accountant of theCompany.
7. Zhang Guiping, male, born in August 1951, is a member of the Revolutionary Committee of the Chinese Kuomintang and abachelor's degree holder. He is currently a member of the 13
th
CPPCC National Committee, Chairman of Sunning Global, Chairmanof Suning Universal Co., Ltd., Independent Director of the Company, President of Commercial Culture Association of China,Director of Anhui International Huishang Exchange Association, Director of Southeast University, Director and Professor at NanjingNormal University, and other social positions. Many awards have been bestowed upon him, including “Excellent Contributor toBuilding of Socialism with Chinese Characteristics”, “China Outstanding Private Entrepreneur”, “China Most Influential BusinessLeader”, “Chinese Talent with Great Integrity”, “Top Ten Influential People in China Real Estate Industry”, and “OutstandingIndividual Contributor to China Charity”.
8. Wang Ruihua, male, born in January 1962, member of CPC, is a non-practicing Chinese CPA with a doctor’s degree inmanagement. Now he acts as a professor and doctoral advisor in the Business School of Central University of Finance andEconomics, the independent director in the Company, Beijing Zhong Ke San Huan Hi-Tech Co., Ltd., and Bank Of Beijing Co., Ltd.,member of Independent Director Committee of China Association for Public Companies.
9. Xu Zhihao, male, born in June 1976, is a senior engineer who graduated from Renmin University of China. He also holds amaster's degree from the PBC School of Finance, Tsinghua University, and is studying for a doctorate at Zhejiang University andSingapore Management University. He possesses the professional qualifications to engage in fund and securities businesses. He iscurrently Independent Director of the Company, Director of Zhejiang Geely Holding Group, CEO of Geely Technology Group Co.,Ltd., Chairman of QJMOTOR, and Chairman of Lifan Group.
10. Sun Wanhua, male, was born in October 1965, member of CPC, with a bachelor degree. Now he acts as the Chairman of theSupervisory Committee of the Company, member of the Party Committee and vice president in Gujing Group. He once held the postsof the member of Standing Committee of CPC County Committee, the Party Secretary of People’s Armed Forces Department andpolitical commissar in Minquan County, Henan Province, member of Standing Committee of Discipline Inspection Committee inBozhou, Deputy Director of Bozhou Supervision Bureau and Deputy Secretary of Bozhou Discipline Inspection Committee,Chairman of the 8
th
Supervisory Committee of the Company.
11. Mr. Yang Xiaofan, male, born in April 1967, member of CPC, is a holder of master degree. At present, he is Supervisor of theCompany and Vice President and member of CPC Committee of Gujing Group. He once acted as Vice President and GeneralManager of Anhui Gujing Real Estates Group Co., Ltd., Assistant to President of Gujing Group; Director of the 5
th, 6th and 7
th
Boardof Directors of the Company and Supervisor of the 7
th
and 8
thSupervisory Committee of the Company.
12. Wang Zibin, male, born in August 1970, member of CPC, a senior auditor, certified internal auditor and CPA with a collegedegree. Now he acts as the Employee Supervisor of the Company, member of the Party Committee in Gujing Group. He once heldthe posts of the GM of Audit Department in Gujing Group, Assistant GM in Bozhou Construction Investment Real EstateDevelopment Co., Ltd., CFO and Deputy GM in Hefei Marketing Center of Bozhou Gujing Sales Company, the Supervisor of the 7
th
and 8
th
Supervisory Committee of the Company and Director in Audit Supervision Center and Secretary of the Discipline InspectionCommittee in Gujing Group.
13. Lu Duicang, male, born in March 1980, member of CPC, a senior accountant with a master degree. Now he serves as theChairman of Anhui Longrui Glass Co., Ltd. He once acted as the accountant, deputy director, and director of No.1 Center of FinanceDepartment, factory director of the Liquor and Spirits Bottling Branch and Manager of Finished Product Department in the Company,Controller of the Financial Management Center in Gujing Group, GM of Anhui Huixin Finance Investment Group Co., Ltd. AssistantFinancial Controller in Gujing Group and the Supervisor of the 5
th
, 6
th, 7
th and 8thSupervisory Committee of the Company.
14. Mr. Zhang Bo, male, born in July 1965, member of CPC, is an economist with bachelor degree. Now, he serves as Employee
~ 63 ~
Supervisor of the Company and Chairman of AnhuiMingguang Liquor Co., Ltd. He once worked as Chairman of the board and GMof Bozhou Gujing Printing Co., Ltd. and Bozhou Gujing Glassware Manufacturing Co., Ltd. as well as Chairman of the Board ofBozhou Ruineng Heat and Power Co., Ltd., Supervisor of the 7
th
and 8
thSupervisory Committee of the Company and Chairman ofthe Labor Union of Gujing Group.
15. Mr. Zhang Lihong, male, born in October 1968, member of CPC, is an economist with bachelor degree. He is incumbent ViceSecretary of CPC and Deputy GM of the Company and member of CPC Committee and deputy secretary of Commission forDiscipline and Inspection of Gujing Group. He once acted as clerk, Secretary of Operation Department and Market DevelopmentDepartment, Deputy GM, Director of General Office, Director of Service Centre of Bozhou Gujing Sales Co., Ltd., Director of HRDepartment and Administrative Service Center and GM Assistant of the Company.
16. Mr. Zhu Xianghong, male, born in September 1974, member of CPC, is a senior Wine Taster with bachelor degree. He isincumbent Deputy GM of Company, GM of Yellow Crane Tower Liquor Industry Co., Ltd. He once acted as GM of ProductDepartment of Bozhou Gujing Sales Co., Ltd., GM of Hefei Office, regional GM of Northern Anhui Province, GM of AnhuiOperating Centre, standing Deputy GM of Sales Company and assistant to GM of the Company.
17. Mr. Gao Jiakun, male, born in November 1970, member of CPC, is a holder of bachelor degree. He is incumbent member of theCPC and Deputy GM of the Company. He once served as GM of Production Management Department, Vice Director of ProductionManagement Centre, Chairman of the Board and GM of Bozhou Pairuite Packing Products Co., Ltd., Director of Finished ProductsFilling Centre and Production Management Centre, and assistant to GM of the Company.
18. Li Anjun, male, born in May 1970, is a member of CPC with a master's degree. He is currently a member of the Party Committee,Deputy General Manager, Chief Engineer, and Director of the Technical Quality Center of the Company. He served as the DeputyDirector of the Company's Technical Quality Center.
19. Kang Lei, male, born in July 1978, is a member of CPC with a college degree. He is currently Assistant to General Manager, andDirector of the Enterprise Management Center of the Company. He served as Deputy Director of the Financial Management Centerof Bozhou Gujing Sales Company, Director of the Company's Administrative Service Center, and Deputy Director of the President'sExecutive Office of Gujing Group.
20. Zhu Jiafeng, male, born in August 1977, is a member of CPC with a college degree. He is currently Assistant to General Manager,Deputy Chief Accountant and Director of the Financial Management Center of the Company. He served as the Manager and DeputyDirector of the Financial Management Center of the Company.Offices held concurrently in shareholding entities:
√Applicable □Not applicable
| Name | Shareholding entity | Office held in the shareholding entity | Start of tenure | End of tenure | Remuneration or allowance from the shareholding entity |
| Liang Jinhui | Anhui Gujing Group Co., Ltd. | Chairman of the Board of Directors | 1 May 2014 | Yes | |
| Li Peihui | Anhui Gujing Group Co., Ltd. | President | 31 October 2017 | Yes | |
| Sun Wanhua | Anhui Gujing Group Co., Ltd. | Vice President | 31 October 2017 | Yes | |
| Yang Xiaofan | Anhui Gujing Group Co., Ltd. | Vice President | 1 November 2009 | Yes | |
| Notes | The above-mentioned personnel, though they take posts in shareholders’ entities, comply with the relevant | ||||
~ 64 ~
employment requirements of Company Law, Securities Law and never disciplined by CSRC, other relevantdepartments and the Stock Exchange.
Offices held concurrently in other entities:
√Applicable □Not applicable
| Name | Other entity | Office held in other entity | Start of tenure | End of tenure | Remuneration or allowance from other entity |
| Zhang Guiping | Suning Universal Group Co.,Ltd | Chairman of the Board | |||
| Zhang Guiping | Suning Universal Co.,Ltd | Chairman of the Board, President | |||
| Xu Zhihao | Zhejiang Geely Holding Group Co.,Ltd. | Director | |||
| Xu Zhihao | Geely Technology Group Co., Ltd. | CEO | |||
| Xu Zhihao | Zhejiang Qjiang Motorcycle Co.,Ltd. | Chairman of the Board | |||
| Xu Zhihao | Lifan Technology (Group) Co.,Ltd. | Chairman of the Board | |||
| Xu Zhihao | Chongqing Jianghehui Enterprise Management Co., Ltd. | Executive director & manager | |||
| Wang Ruihua | Central University of Finance and Economics | Professor | |||
| Wang Ruihua | Bank Of Beijing Co., Ltd. | Independent director | |||
| Wang Ruihua | Beijing Zhong Ke San Huan High-Tech Co.,Ltd. | Independent director | |||
| Notes | Zhang Guiping, Wang Ruihua and Xu Zhihua are independent directors of the Company. | ||||
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The remuneration is determined based on the annual performance of the Company and the appraisal result in accordance with thespirits in the Implementation Opinion on Deepening the System Reform of Remuneration of Chargers in Provincial Enterprises(WF[2015] No. 28), and the Interim Procedures of Remuneration Management of Chargers in Municipal Enterprises (GZG[2017] No.
21) issued by the CPC Anhui Provincial Committee and the People’s Government of Anhui.(III) Actual Payment of remuneration for Directors, Supervisors and Executive OfficersPayment of the remuneration of Directors, Supervisors and Executive Officers is distributed annually according to check.Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
| Name | Office title | Gender | Age | Incumbent/Former | Total before-tax remuneration from the Company | Any remuneration from related party |
| Liang Jinhui | Chairman of the Board | Male | 55 | Incumbent | Yes | |
| Li Peihui | Director | Male | 48 | Incumbent | Yes | |
| Zhou Qingwu | Director, GM | Male | 47 | Incumbent | 120.22 | No |
| Yan Lijun | Director, Executive Deputy GM | Male | 48 | Incumbent | 343.83 | No |
| Xu Peng | Director, Deputy GM | Male | 51 | Incumbent | 103.40 | No |
| Ye Changqing | Director, Deputy GM, Chief Accountant, Secretary of the Board | Male | 47 | Incumbent | 99.89 | No |
| Zhang Guiping | Independent director | Male | 70 | Incumbent | No | |
| Wang Ruihua | Independent director | Male | 59 | Incumbent | 7.50 | No |
| Xu Zhihao | Independent director | Male | 45 | Incumbent | No | |
| Sun Wanhua | Chairman of Supervisory Committee | Male | 56 | Incumbent | Yes | |
| Yang Xiaofan | Supervisor | Male | 54 | Incumbent | Yes | |
| Wang Zibin | Employee supervisor | Male | 51 | Incumbent | Yes | |
| Lu Duicang | Supervisor | Male | 41 | Incumbent | 11.38 | No |
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| Zhang Bo | Employee supervisor | Male | 56 | Incumbent | Yes | |
| Zhang Lihong | Deputy GM | Male | 53 | Incumbent | 110.32 | No |
| Zhu Xianghong | Deputy GM | Male | 47 | Incumbent | 291.07 | No |
| Gao Jiakun | Deputy GM | Male | 51 | Incumbent | 93.30 | No |
| Li Anjun | Deputy GM | Male | 51 | Incumbent | 94.36 | No |
| Kang Lei | GM assistant | Male | 43 | Incumbent | 74.82 | No |
| Zhu Jiafeng | GM assistant | Male | 44 | Incumbent | 75.82 | No |
| Wang Gao | Independent director | Male | 56 | Former | 7.50 | No |
| Song Shuyu | Independent director | Male | 59 | Former | 7.50 | No |
| Total | -- | -- | -- | -- | 1,440.91 | -- |
| Number of in-service employees of the Company as the parent | 5,673 |
| Number of in-service employees of major subsidiaries | 4,263 |
| Total number of in-service employees | 9,936 |
| Total number of paid employees in the Reporting Period | 9,936 |
| Number of retirees to whom the Company as the parent or its major subsidiaries need to pay retirement pensions | 1,313 |
| Functions | |
| Function | Employees |
| Production | 5,215 |
| Sales | 2,619 |
| Technical | 474 |
| Financial | 197 |
| Administrative | 1,431 |
| Total | 9,936 |
| Educational backgrounds | |
| Educational background | Employees |
~ 67 ~
| Master or above | 95 |
| Bachelor | 2,530 |
| Junior college | 2,096 |
| High school or below | 5,215 |
| Total | 9,936 |
~ 68 ~
Part X Corporate GovernanceI General Information of Corporate GovernanceSince foundation, the Company constantly perfects corporate governance structure and standardize its management strictly inaccordance with the Company Law, Securities Law, Standard for Governance of Listed Companies, Guide Opinion on Setting upIndependent Directors Systems for Listed Companies as well as principles and requirements of other relevant laws, regulations andnormative documents.In the reporting period, the Company developed internal control activity, implemented Rules on Management of Assets Provision forImpairment, The Policy on the Liability of Disclosing Materially Inaccurate Information in Annual Report, Rules for Management ofExternal Information User and Rules for Management of Insider of Inner Information, perfected internal control system step by step,promoted normative operation and healthy development. The Board of Directors, the Supervisory Committee and the management ofthe Company make decisions, perform rights and assume obligation strictly according to the standard operation rules and innercontrol system so as to make sure the standard operation of the Company in the frame of rules and systems.In the reporting period, according to requirements of China Securities Regulatory Commission and Rules for Listing of Shares inShenzhen Stock Exchange and with the “open, fair and just” principle, the Company seriously and timely performed informationdisclosure obligation and guaranteed that the information disclosed is true, accurate and complete, free from fictitious presentation,misleading statements or important omissions, so that all the shareholders will equally acquaint themselves with all the notices of theCompany.After the reporting period, the Company will continuously optimize and perfect the corporate governance of listed companies, furtherimprove the standard operation of the Company.Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing thegovernance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,Asset, Organization and Financial AffairsThe Company and the controlling shareholder, Anhui Gujing Group Co., Ltd., realized five independences in terms of business,personnel, assets, organizations and financial affairs, with separate independent calculation, independent and complete business,independent operation ability, and independent responsibilities and risks. Majority shareholders cannot surpass the shareholders’general meeting to directly or indirectly interfere with the Company’s decisions and legal production as well as operation activities,and there is no same trade competition state of the same products between the company and majority shareholders.III Horizontal Competition
□ Applicable √ Not applicable
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IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
| Meeting | Type | Investor participation ratio | Date of the meeting | Disclosure date | Index to disclosed information |
| The 2019 Annual General Meeting | Annual General Meeting | 65.52% | 19 June 2020 | 20 June 2020 | Announcement on Resolutions of the 2019 Annual General Meeting disclosed on www.cninfo.com.cn |
| The 1st Extraordinary General Meeting of 2020 | Extraordinary General Meeting | 68.11% | 11 December 2020 | 12 December 2020 | Announcement on Resolutions of the 1st Extraordinary General Meeting of 2020 disclosed on www.cninfo.com.cn |
| Attendance of independent directors at board meetings and general meetings | |||||||
| Independent director | Total number of board meetings the independent director was eligible to attend | Board meetings attended on site | Board meetings attended by way of telecommunication | Board meetings attended through a proxy | Board meetings the independent director failed to attend | The independent director failed to attend two consecutive board meetings (yes/no) | General meetings attended |
| Zhang Guiping | 4 | 1 | 3 | 0 | 0 | No | 0 |
| Wang Ruihua | 6 | 0 | 6 | 0 | 0 | No | 1 |
| Xu Zhihao | 4 | 1 | 3 | 0 | 0 | No | 0 |
| Wang Gao | 2 | 0 | 2 | 0 | 0 | No | 0 |
| Song Shuyu | 2 | 0 | 2 | 0 | 0 | No | 0 |
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Why any independent director failed to attend two consecutive board meetings:
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, the independent directors of the Company made professional opinion or suggestions on the Company'sbusiness decision in strict accordance with the relevant laws, regulations and the Articles of Association of the Company, andprovided independent opinion on issues needing independent directors’ opinion in the independent exercise of their duties, playing adue role in safeguarding the legitimate rights and interests of the Company's shareholders.VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
1. Duty performance of the Strategy Committee
The Strategy Committee is under the leadership of the Board of Directors. In the Reporting Period, in strict compliance with theSpecific Implementation Rules for the Strategy Committee, the Strategy Committee conscientiously performed its duties, making alot of constructive suggestions for the efficient execution of the Company’s strategy.
2. Duty performance of the Audit Committee
In the reporting period, five members of the Audit Committee diligently and responsibly performed their duties as stipulated in therelevant rules of the Company:
(1) It reviewed the annual report of the Company in 2020.
(2) Upon discussion with RSM China for the 2020 annual audit, it determined the schedule for the financial report and internalcontrol audit for 2020.
(3) It communicated in advance with the CPAs firm and independent directors before the CPAs firm came to the Company andstarted the 2020 annual audit.
(4) It reviewed the short form of the preliminary financial statements of 2020 prepared by the financial department of the Companyfor the first time before the annual auditor came to the Company and made some helpful suggestions.
(5) After the annual auditor came to the Company and started the audit, it communicated with the registered accountants on theproblems found in the audit and the submission time of the audit report.
(6) After the annual auditor issued the preliminary audit opinion, it reviewed the 2020 annual financial statements again and made thefinal resolution.
3. Duty performance of the Nomination Committee
In the reporting period, in strict compliance with the Specific Implementation Rules of the Nomination Committee, the NominationCommittee vigorously worked on various tasks, which ensured that the senior management staffs of the Company were hired incompliance with laws and regulations.
(1) In the Reporting Period, the senior management staff hired by the Company satisfied the requirements of the Company Law andother relevant laws and regulations. They were qualified as senior management staff. They were not in such a case where theCompany Law should forbid them from being senior management staff. Nor they were forbidden by CSRC from entering the
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securities market.
(2) In the Reporting Period, the senior management staff of the Company were nominated and hired in line with the Company Lawand the Company’s Articles of Association. The hired personnel have never been punished by CSRC, other relevant authorities orstock exchanges.
4. Duty performance of Remuneration and Appraisal Committee
(1) The Remuneration and Appraisal Committee affiliated to the Board of Directors, according to relevant regulations ofImplementation Rules of Remuneration and Appraisal Committee successfully completed the annual performance appraisal todirectors, supervisors and senior executives in line with standards and procedures of performance appraisal during the reportingperiod.
(2) Through the deliberation and assessment of the committee, the consistent opinion was that the general remuneration levelcomplied with development of the Company; the remuneration level of directors, supervisors and senior executives accuratelyreflected the overall performance situation of the Company and individual work performance, which complied with the remunerationmanagement system; the remuneration plan and procedure of issuing remuneration were in accordance with the laws and did notviolate relevant national laws and regulations.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the ReportingPeriod.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
The Company has set up a Performance Appraisal and Incentive Mechanism for Senior Executives, which links remuneration ofsenior executives with the Company’ performance, the decision-making management adopts the assessment and incentive measuresby linking the annual remuneration with the Company’ economic indexes & management achievement. To promote the standard,healthy and orderly development of the Company and keep the stability of the Executive Officers, the Company annually sets up theassessment index for them and signs a written responsibility of business target at the year-begin, then decides their remuneration andthe rewards & punishment at the year-end according to their personal work performance and completion of the Company’s operatingtarget.IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
| Disclosure date of the internal control self-evaluation report | 30 April 2021 |
| Index to the disclosed internal control | See www.cninfo.com.cn for the Anhui Gujing Distillery Company Limited |
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| self-evaluation report | Self-assessment Report of Internal Control | |
| Evaluated entities’ combined assets as % of consolidated total assets | 97.60% | |
| Evaluated entities’ combined operating revenue as % of consolidated operating revenue | 99.84% | |
| Identification standards for internal control weaknesses | ||
| Type | Weaknesses in internal control over financial reporting | Weaknesses in internal control not related to financial reporting |
| Nature standard | Critical defect: Separate defect or other defects that result in failure in preventing, finding out and correcting major wrong reporting in financial report in time. The following circumstances are deemed as critical defects: (1) Ineffective in controlling the environment; (2) Malpractice of directors, supervisors and senior management officers; (3) According to external auditing, there’s major wrong reporting in current financial report, which fails to be found by the company in its operating process; (4) Major defects found and reported to the top management fail to be corrected within a reasonable period of time; (5) The supervision of audit committee of the company and its internal audit department for internal control is ineffective; (6) Other defects that may affect correct judgment of users of statements. Major defect: Separate defect or other defects that result in failure in preventing, finding out and correcting wrong reporting in financial report in time, which shall be noted by the top management despite of not attaining or exceeding critical level. Minor defect: Other internal control defects not constituting critical or major defects. | Any of the following circumstances shall be deemed as a critical defect, and other circumstances shall be deemed as major or minor defects according to their degree of impact. (1) Violate national laws, regulations or standardized documents; (2) Major decision making procedure is not scientific; (3) Lack of systems results in systematic failure; (4) Critical or major defects fail to be rectified; (5) Other circumstances that have major impact on the company. |
| Quantitative standard | Critical defect: (1) Wrong reporting ≥0.5% of total operating revenue; (2) Wrong reporting ≥5% of total profit; (3) Wrong reporting ≥0.5% of total assets; | Critical defect: The defect with direct property loss amounting to over RMB10 million, has great negative impact on the company and is disclosed in public in the form of announcement. |
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| (4) Wrong reporting ≥0.5% of total owner’s equity. Major defect: (1) Wrong reporting ≥0.2% but ＜0.5% of total operating revenue; (2) Wrong reporting ≥2% but ＜5% of total profit; (3) Wrong reporting ≥0.2% but ＜0.5% of total assets; (4) Wrong reporting ≥0.2% but ＜0.5% of total owner’s equity. Minor defect: (1) Wrong reporting＜0.2% of total operating revenue; (2) Wrong reporting＜2% of total profit; (3) Wrong reporting＜0.2% of total assets; (4) Wrong reporting＜0.2% of total owner’s equity. | Major defect: The defect with direct property loss amounting to RMB1 million to RMB10 million (included), or is penalized by governmental authority of the country but has not resulted in negative impact on the company. Minor defect: The defect with direct property loss no more than RMB1 million (included), or is penalized by governmental authority of the provincial-level or below but has not resulted in negative impact on the company. | |
| Number of material weaknesses in internal control over financial reporting | 0 | |
| Number of material weaknesses in internal control not related to financial reporting | 0 | |
| Number of serious weaknesses in internal control over financial reporting | 0 | |
| Number of serious weaknesses in internal control not related to financial reporting | 0 | |
| Opinion paragraph in the independent auditor’s report on internal control | |
| We believe that the Company has maintained effective internal control on financial report in all significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 December 2020. | |
| Independent auditor’s report on internal control disclosed or not | Disclosed |
| Disclosure date | 30 April 2021 |
| Index to such report disclosed | See www.cninfo.com.cn for Audit Report of Internal Control |
| Type of the auditor’s opinion | Unmodified unqualified opinion |
| Material weaknesses in internal control not related to financial reporting | None |
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Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internalcontrol.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internalcontrol self-evaluation report issued by the Company’s Board.
√ Yes □ No
~ 75 ~
Part XI Corporate BondsDoes the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of thisReport’s approval or were due but could not be redeemed in full?No
~ 76 ~
Part XII Financial StatementsI Independent Auditor’s Report
| Type of auditor’s opinion | Unmodified unqualified opinion |
| Date of signing the auditor’s report | 29 April 2021 |
| Name of the auditor | RSM China |
| No. of the auditor’s report | Rongcheng audit character [2021] 518Z0472 |
| Name of CPA | Chen Lianwu, Li Jiacheng |
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(1) Understand the internal control process design related to the sales business, and execute the walk-through test, perform thecontrol test on the identified key control points;
(2) Interview with the management, check the samples of sales contract, analyze the significant risk and reward transferring pointrelated to revenue recognition of liquor sales, and then evaluate whether the company's sales revenue recognition policy isreasonable;
(3) Sampling inspection of supporting documents related to liquor sales revenue recognition, including sales orders, sales invoices,outbound orders, etc.;
(4) Compared with the liquor sales data of other enterprises in the same industry, compared the liquor sales data of the last periodwith the current period, analyzed the overall rationality of revenue and gross margin;
(5) For the liquor sales revenue recognized before and after the balance sheet date, select samples to check the sales orders, salesinvoices, outbound orders, etc., in order to evaluate whether the sales revenue is recorded in an appropriate accounting period;
(6) Confirm the amount of liquor sold and the closing balance of the advance payment to the main distributor by sendingconfirmation letter.(II) Accuracy of inventory balances
1. Description
Refer to notes to the consolidated financial statements "3 13. Inventory" and "5. 8. Inventory".Anhui Gujing has a large inventory balance and needs to maintain an appropriate level of inventory to meet future market orproduction demand. The inventory balance accounts for 22.50% of the Company's total assets, and most of the inventory issemi-finished products and work in progress products. As the most important asset of liquor production enterprises, inventory has ahigh balance at the end of the year and a large proportion of the total assets. Therefore, we regard the accuracy of the company'sinventory balance as a key audit matter.
2. Audit response
Our procedures for the accuracy of inventory balances include:
(1) Understand the internal control process design related to inventory business, and carry out walk-through test, carry out controltests for identified key control points;
(2) Obtain the stocktaking plan and stocktaking results of the company, understand the stocktaking methods and review procedures ofthe company, and supervise the stocktaking;
(3) Understand the company's inventory cost accounting method, select several months of cost calculation sheet to review, and selectthe main categories of inventory to carry out valuation test;
(4) To understand the provision method of the company's inventory impairment, evaluate the appropriateness of the provision method,and review whether the provision amount is correct;
(5) Perform analytical procedures and compare with companies in the same industry.
IV. Other informationManagement of Anhui Gujing is responsible for the other information. The other information comprises the information included inthe Annual Report of Anhui Gujing for the year of 2020, but does not include the financial statements and our auditor’s reportthereon.Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusionthereon.In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, considerwhether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated.
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If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are requiredto report that fact. We have nothing to report in this regard.V. Responsibilities of Management and Those Charged with Governance for the Financial StatementsManagement of Anhui Gujing is responsible for the preparation and fair presentation of the financial statements in accordance withAccounting Standards of Business Enterprises, and for the design, implementation and maintenance of such internal control asmanagement determines is necessary to enable the preparation of financial statements that are free from material misstatement,whether due to fraud or error.In preparing the financial statements, management is responsible for assessing Anhui Gujing’s ability to continue as a going concern,disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management eitherintends to liquidate Anhui Gujing or to cease operations, or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing Anhui Gujing’s financial reporting process.VI. Auditor’s Responsibilities for the Audit of the Financial StatementsOur Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a highlevel of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatementwhen it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism throughout theaudit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and performaudit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraudmay involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosuresmade by management.
4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidenceobtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Anhui Gujing’sability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions maycause Anhui Gujing to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, and whether the financial statements representthe underlying transactions and events in a manner that achieves fair presentation.
6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within AnhuiGujing to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of thegroup audit. We remain solely responsible for our audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit.We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regardingindependence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
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independence, and where applicable, related safeguards.From the matters communicated with those charged with governance, we determine those matters that were of most significance inthe audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably beexpected to outweigh the public interest benefits of such communication.
| RSM China CPA LLP | [Name of CPA]：Chen Lianwu |
| China·Beijing | [Name of CPA]：Li Jiacheng |
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II Financial StatementsCurrency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Anhui Gujing Distillery Company Limited
31 December 2020
Unit: RMB
| Item | 31 December 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 5,971,212,569.66 | 5,619,749,918.09 |
| Settlement reserve | ||
| Interbank loans granted | ||
| Held-for-trading financial assets | 203,877,915.51 | 509,031,097.02 |
| Derivative financial assets | ||
| Notes receivable | 0.00 | 1,004,217,431.56 |
| Accounts receivable | 67,933,735.91 | 40,776,567.96 |
| Accounts receivable financing | 1,673,510,794.51 | 0.00 |
| Prepayments | 55,575,543.21 | 197,453,313.96 |
| Premiums receivable | ||
| Reinsurance receivables | ||
| Receivable reinsurance contract reserve | ||
| Other receivables | 33,451,121.48 | 25,746,957.22 |
| Including: Interest receivable | 0.00 | 1,908,788.81 |
| Dividends receivable | ||
| Financial assets purchased under resale agreements | ||
| Inventories | 3,416,880,808.96 | 3,015,051,961.78 |
| Contract assets | ||
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 97,412,681.26 | 114,439,167.07 |
| Total current assets | 11,519,855,170.50 | 10,526,466,414.66 |
| Non-current assets: | ||
| Loans and advances to customers |
~ 81 ~
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 4,915,575.83 | 4,678,282.24 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,392,943.54 | 4,710,086.02 |
| Fixed assets | 1,797,789,271.62 | 1,722,572,998.79 |
| Construction in progress | 279,169,201.60 | 183,984,816.07 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 934,711,977.79 | 785,717,932.76 |
| Development costs | ||
| Goodwill | 478,283,495.29 | 478,283,495.29 |
| Long-term prepaid expense | 64,591,933.65 | 70,240,106.82 |
| Deferred income tax assets | 96,972,421.95 | 90,494,544.51 |
| Other non-current assets | 5,943,717.02 | 4,148,686.00 |
| Total non-current assets | 3,666,770,538.29 | 3,344,830,948.50 |
| Total assets | 15,186,625,708.79 | 13,871,297,363.16 |
| Current liabilities: | ||
| Short-term borrowings | 70,665,500.00 | 0.00 |
| Borrowings from the central bank | ||
| Interbank loans obtained | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 140,614,535.60 | 703,679,646.86 |
| Accounts payable | 505,206,561.86 | 563,494,195.40 |
| Advances from customers | 0.00 | 529,863,011.73 |
| Contract liabilities | 1,206,573,886.26 | 0.00 |
| Financial assets sold under repurchase agreements | ||
| Customer deposits and interbank deposits |
~ 82 ~
| Payables for acting trading of securities | ||
| Payables for underwriting of securities | ||
| Employee benefits payable | 498,129,114.76 | 454,189,532.89 |
| Taxes payable | 349,142,692.10 | 482,903,109.59 |
| Other payables | 1,396,599,161.14 | 1,315,878,229.01 |
| Including: Interest payable | ||
| Dividends payable | ||
| Handling charges and commissions payable | ||
| Reinsurance payables | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 320,792,383.03 | 197,484,121.41 |
| Total current liabilities | 4,487,723,834.75 | 4,247,491,846.89 |
| Non-current liabilities: | ||
| Insurance contract reserve | ||
| Long-term borrowings | 60,117,638.89 | 0.00 |
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 75,111,997.53 | 72,778,437.92 |
| Deferred income tax liabilities | 114,821,451.24 | 118,872,366.61 |
| Other non-current liabilities | ||
| Total non-current liabilities | 250,051,087.66 | 191,650,804.53 |
| Total liabilities | 4,737,774,922.41 | 4,439,142,651.42 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments |
~ 83 ~
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,295,405,592.25 | 1,295,405,592.25 |
| Less: Treasury stock | ||
| Other comprehensive income | ||
| Specific reserve | ||
| Surplus reserves | 256,902,260.27 | 256,902,260.27 |
| General reserve | ||
| Retained earnings | 7,987,380,161.21 | 6,888,203,911.92 |
| Total equity attributable to owners of the Company as the parent | 10,043,288,013.73 | 8,944,111,764.44 |
| Non-controlling interests | 405,562,772.65 | 488,042,947.30 |
| Total owners’ equity | 10,448,850,786.38 | 9,432,154,711.74 |
| Total liabilities and owners’ equity | 15,186,625,708.79 | 13,871,297,363.16 |
| Item | 31 December 2020 | 31 December 2019 |
| Current assets: | ||
| Monetary assets | 4,287,808,756.66 | 2,919,818,830.20 |
| Held-for-trading financial assets | 203,877,915.51 | 489,861,097.02 |
| Derivative financial assets | ||
| Notes receivable | 0.00 | 378,740,100.82 |
| Accounts receivable | 494,976.27 | 218,558,555.07 |
| Accounts receivable financing | 1,399,214,331.97 | 0.00 |
| Prepayments | 11,737,580.47 | 17,906,999.63 |
| Other receivables | 141,378,010.40 | 125,219,213.84 |
| Including: Interest receivable | 0.00 | 301,888.89 |
| Dividends receivable | ||
| Inventories | 2,976,360,208.66 | 2,688,839,871.27 |
| Contract assets |
~ 84 ~
| Assets held for sale | ||
| Current portion of non-current assets | ||
| Other current assets | 9,734,249.41 | 1,280,998.32 |
| Total current assets | 9,030,606,029.35 | 6,840,225,666.17 |
| Non-current assets: | ||
| Investments in debt obligations | ||
| Investments in other debt obligations | ||
| Long-term receivables | ||
| Long-term equity investments | 1,118,213,665.32 | 1,148,213,665.32 |
| Investments in other equity instruments | ||
| Other non-current financial assets | ||
| Investment property | 4,392,943.54 | 4,710,086.02 |
| Fixed assets | 1,322,818,855.86 | 1,310,704,771.36 |
| Construction in progress | 139,865,487.21 | 84,477,784.02 |
| Productive living assets | ||
| Oil and gas assets | ||
| Right-of-use assets | ||
| Intangible assets | 369,163,089.18 | 243,928,047.95 |
| Development costs | ||
| Goodwill | ||
| Long-term prepaid expense | 44,072,241.78 | 48,354,967.15 |
| Deferred income tax assets | 30,716,488.80 | 31,360,809.87 |
| Other non-current assets | 75,999.80 | 574,026.00 |
| Total non-current assets | 3,029,318,771.49 | 2,872,324,157.69 |
| Total assets | 12,059,924,800.84 | 9,712,549,823.86 |
| Current liabilities: | ||
| Short-term borrowings | ||
| Held-for-trading financial liabilities | ||
| Derivative financial liabilities | ||
| Notes payable | 74,535.60 | 49,114,582.04 |
| Accounts payable | 397,554,006.51 | 450,303,984.53 |
| Advances from customers | 0.00 | 31,724.77 |
| Contract liabilities | 1,130,074,436.39 | 0.00 |
~ 85 ~
| Employee benefits payable | 127,974,331.78 | 100,357,808.20 |
| Taxes payable | 200,876,134.49 | 371,012,223.50 |
| Other payables | 524,000,730.59 | 274,053,511.54 |
| Including: Interest payable | ||
| Dividends payable | ||
| Liabilities directly associated with assets held for sale | ||
| Current portion of non-current liabilities | ||
| Other current liabilities | 160,738,917.51 | 11,953,800.20 |
| Total current liabilities | 2,541,293,092.87 | 1,256,827,634.78 |
| Non-current liabilities: | ||
| Long-term borrowings | ||
| Bonds payable | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Lease liabilities | ||
| Long-term payables | ||
| Long-term employee benefits payable | ||
| Provisions | ||
| Deferred income | 31,601,732.51 | 33,229,246.47 |
| Deferred income tax liabilities | 19,407,895.89 | 22,799,814.64 |
| Other non-current liabilities | ||
| Total non-current liabilities | 51,009,628.40 | 56,029,061.11 |
| Total liabilities | 2,592,302,721.27 | 1,312,856,695.89 |
| Owners’ equity: | ||
| Share capital | 503,600,000.00 | 503,600,000.00 |
| Other equity instruments | ||
| Including: Preferred shares | ||
| Perpetual bonds | ||
| Capital reserves | 1,247,162,107.35 | 1,247,162,107.35 |
| Less: Treasury stock | ||
| Other comprehensive income | ||
| Specific reserve |
~ 86 ~
| Surplus reserves | 251,800,000.00 | 251,800,000.00 |
| Retained earnings | 7,465,059,972.22 | 6,397,131,020.62 |
| Total owners’ equity | 9,467,622,079.57 | 8,399,693,127.97 |
| Total liabilities and owners’ equity | 12,059,924,800.84 | 9,712,549,823.86 |
| Item | 2020 | 2019 |
| 1. Revenue | 10,292,064,534.41 | 10,416,961,584.23 |
| Including: Operating revenue | 10,292,064,534.41 | 10,416,961,584.23 |
| Interest income | ||
| Insurance premium income | ||
| Handling charge and commission income | ||
| 2. Costs and expenses | 7,878,036,538.50 | 7,833,874,460.30 |
| Including: Cost of sales | 2,549,814,944.76 | 2,426,046,924.89 |
| Interest expense | ||
| Handling charge and commission expense | ||
| Surrenders | ||
| Net insurance claims paid | ||
| Net amount provided as insurance contract reserve | ||
| Expenditure on policy dividends | ||
| Reinsurance premium expense | ||
| Taxes and surcharges | 1,625,289,169.55 | 1,592,905,554.04 |
| Selling expense | 3,120,977,163.32 | 3,184,894,221.10 |
| Administrative expense | 802,201,580.48 | 685,280,546.45 |
| R&D expense | 40,590,136.46 | 42,373,017.33 |
| Finance costs | -260,836,456.07 | -97,625,803.51 |
| Including: Interest expense | 876,815.80 | 33,652,843.25 |
| Interest income | 261,861,342.00 | 133,813,626.35 |
| Add: Other income | 47,474,532.19 | 98,244,470.32 |
~ 87 ~
| Return on investment (“-” for loss) | 6,787,443.77 | 126,427,450.28 |
| Including: Share of profit or loss of joint ventures and associates | 237,293.59 | -221,717.76 |
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Exchange gain (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | -19,983,181.51 | 17,585,151.48 |
| Credit impairment loss (“-” for loss) | -933,752.84 | -932,729.84 |
| Asset impairment loss (“-” for loss) | -14,095,047.32 | -1,217,745.51 |
| Asset disposal income (“-” for loss) | 1,223,536.53 | 252,518.68 |
| 3. Operating profit (“-” for loss) | 2,434,501,526.73 | 2,823,446,239.34 |
| Add: Non-operating income | 66,597,288.07 | 57,805,996.37 |
| Less: Non-operating expense | 27,262,848.08 | 8,410,456.65 |
| 4. Profit before tax (“-” for loss) | 2,473,835,966.72 | 2,872,841,779.06 |
| Less: Income tax expense | 625,947,783.69 | 715,037,184.72 |
| 5. Net profit (“-” for net loss) | 1,847,888,183.03 | 2,157,804,594.34 |
| 5.1 By operating continuity | ||
| 5.1.1 Net profit from continuing operations (“-” for net loss) | 1,847,888,183.03 | 2,157,804,594.34 |
| 5.1.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5.2 By ownership | ||
| 5.2.1 Net profit attributable to owners of the Company as the parent | 1,854,576,249.29 | 2,097,527,739.86 |
| 5.2.1 Net profit attributable to non-controlling interests | -6,688,066.26 | 60,276,854.48 |
| 6. Other comprehensive income, net of tax | ||
| Attributable to owners of the Company as the parent | ||
| 6.1 Items that will not be reclassified to profit or loss | ||
| 6.1.1 Changes caused by remeasurements on defined benefit |
~ 88 ~
| schemes | ||
| 6.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 6.1.3 Changes in the fair value of investments in other equity instruments | ||
| 6.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 6.1.5 Other | ||
| 6.2 Items that will be reclassified to profit or loss | ||
| 6.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 6.2.2 Changes in the fair value of investments in other debt obligations | ||
| 6.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 6.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 6.2.5 Reserve for cash flow hedges | ||
| 6.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 6.2.7 Other | ||
| Attributable to non-controlling interests | ||
| 7. Total comprehensive income | 1,847,888,183.03 | 2,157,804,594.34 |
| Attributable to owners of the Company as the parent | 1,854,576,249.29 | 2,097,527,739.86 |
| Attributable to non-controlling interests | -6,688,066.26 | 60,276,854.48 |
| 8. Earnings per share | ||
| 8.1 Basic earnings per share | 3.68 | 4.17 |
| 8.2 Diluted earnings per share | 3.68 | 4.17 |
~ 89 ~
Head of the Company’s financial department: Zhu Jiafeng
4. Income Statement of the Company as the Parent
Unit: RMB
| Item | 2020 | 2019 |
| 1. Operating revenue | 5,879,367,295.74 | 5,564,895,569.73 |
| Less: Cost of sales | 2,404,770,507.12 | 2,269,256,097.78 |
| Taxes and surcharges | 1,486,154,736.28 | 1,366,947,316.98 |
| Selling expense | 51,077,418.28 | 66,666,543.63 |
| Administrative expense | 573,997,212.59 | 449,947,174.03 |
| R&D expense | 26,372,590.76 | 21,923,357.07 |
| Finance costs | -147,492,851.31 | -34,323,060.49 |
| Including: Interest expense | 0.00 | 33,506,232.15 |
| Interest income | 147,976,230.15 | 69,580,038.23 |
| Add: Other income | 22,085,298.08 | 54,224,566.00 |
| Return on investment (“-” for loss) | 703,295,993.73 | 846,168,044.08 |
| Including: Share of profit or loss of joint ventures and associates | ||
| Income from the derecognition of financial assets at amortized cost (“-” for loss) | ||
| Net gain on exposure hedges (“-” for loss) | ||
| Gain on changes in fair value (“-” for loss) | -19,983,181.51 | 17,585,151.48 |
| Credit impairment loss (“-” for loss) | 381,399.86 | -274,201.63 |
| Asset impairment loss (“-” for loss) | -8,393,409.55 | -948,348.71 |
| Asset disposal income (“-” for loss) | 60,176.99 | 36,552.41 |
| 2. Operating profit (“-” for loss) | 2,181,933,959.62 | 2,341,269,904.36 |
| Add: Non-operating income | 38,145,926.01 | 45,105,856.60 |
| Less: Non-operating expense | 22,352,299.16 | 4,137,379.38 |
| 3. Profit before tax (“-” for loss) | 2,197,727,586.47 | 2,382,238,381.58 |
| Less: Income tax expense | 374,398,634.87 | 396,856,938.96 |
~ 90 ~
| 4. Net profit (“-” for net loss) | 1,823,328,951.60 | 1,985,381,442.62 |
| 4.1 Net profit from continuing operations (“-” for net loss) | 1,823,328,951.60 | 1,985,381,442.62 |
| 4.2 Net profit from discontinued operations (“-” for net loss) | ||
| 5. Other comprehensive income, net of tax | ||
| 5.1 Items that will not be reclassified to profit or loss | ||
| 5.1.1 Changes caused by remeasurements on defined benefit schemes | ||
| 5.1.2 Other comprehensive income that will not be reclassified to profit or loss under the equity method | ||
| 5.1.3 Changes in the fair value of investments in other equity instruments | ||
| 5.1.4 Changes in the fair value arising from changes in own credit risk | ||
| 5.1.5 Other | ||
| 5.2 Items that will be reclassified to profit or loss | ||
| 5.2.1 Other comprehensive income that will be reclassified to profit or loss under the equity method | ||
| 5.2.2 Changes in the fair value of investments in other debt obligations | ||
| 5.2.3 Other comprehensive income arising from the reclassification of financial assets | ||
| 5.2.4 Credit impairment allowance for investments in other debt obligations | ||
| 5.2.5 Reserve for cash flow hedges | ||
| 5.2.6 Differences arising from the translation of foreign currency-denominated financial statements | ||
| 5.2.7 Other | ||
| 6. Total comprehensive income | 1,823,328,951.60 | 1,985,381,442.62 |
| 7. Earnings per share |
~ 91 ~
| 7.1 Basic earnings per share | 3.62 | 3.94 |
| 7.2 Diluted earnings per share | 3.62 | 3.94 |
| Item | 2020 | 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 10,807,605,859.36 | 10,746,837,904.99 |
| Net increase in customer deposits and interbank deposits | ||
| Net increase in borrowings from the central bank | ||
| Net increase in loans from other financial institutions | ||
| Premiums received on original insurance contracts | ||
| Net proceeds from reinsurance | ||
| Net increase in deposits and investments of policy holders | ||
| Interest, handling charges and commissions received | ||
| Net increase in interbank loans obtained | ||
| Net increase in proceeds from repurchase transactions | ||
| Net proceeds from acting trading of securities | ||
| Tax rebates | 7,344,191.33 | 9,498,718.50 |
| Cash generated from other operating activities | 3,104,278,291.78 | 1,323,733,316.43 |
| Subtotal of cash generated from operating activities | 13,919,228,342.47 | 12,080,069,939.92 |
| Payments for commodities and services | 2,216,094,155.87 | 1,593,805,653.82 |
| Net increase in loans and advances to customers | ||
| Net increase in deposits in the central bank and in interbank loans granted | ||
| Payments for claims on original insurance contracts |
~ 92 ~
| Net increase in interbank loans granted | ||
| Interest, handling charges and commissions paid | ||
| Policy dividends paid | ||
| Cash paid to and for employees | 2,377,569,201.11 | 2,042,656,319.91 |
| Taxes paid | 3,323,475,922.81 | 3,292,028,435.78 |
| Cash used in other operating activities | 2,377,545,537.15 | 4,959,132,466.96 |
| Subtotal of cash used in operating activities | 10,294,684,816.94 | 11,887,622,876.47 |
| Net cash generated from/used in operating activities | 3,624,543,525.53 | 192,447,063.45 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 326,968,000.00 | 4,007,300,054.88 |
| Return on investment | 41,473,224.56 | 126,649,168.04 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 3,756,621.07 | 4,351,897.20 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 372,197,845.63 | 4,138,301,120.12 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 561,616,750.96 | 412,329,130.60 |
| Payments for investments | 41,798,000.00 | 1,053,830,000.00 |
| Net increase in pledged loans granted | ||
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 603,414,750.96 | 1,466,159,130.60 |
| Net cash generated from/used in investing activities | -231,216,905.33 | 2,672,141,989.52 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received |
~ 93 ~
| Including: Capital contributions by non-controlling interests to subsidiaries | ||
| Borrowings raised | 130,665,500.00 | 0.00 |
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | 130,665,500.00 | |
| Repayment of borrowings | ||
| Interest and dividends paid | 831,838,344.55 | 755,400,000.00 |
| Including: Dividends paid by subsidiaries to non-controlling interests | 75,792,108.39 | 0.00 |
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 831,838,344.55 | 755,400,000.00 |
| Net cash generated from/used in financing activities | -701,172,844.55 | -755,400,000.00 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 2,692,153,775.65 | 2,109,189,052.97 |
| Add: Cash and cash equivalents, beginning of the period | 2,944,749,918.09 | 835,560,865.12 |
| 6. Cash and cash equivalents, end of the period | 5,636,903,693.74 | 2,944,749,918.09 |
| Item | 2020 | 2019 |
| 1. Cash flows from operating activities: | ||
| Proceeds from sale of commodities and rendering of services | 6,224,786,292.61 | 4,469,643,061.53 |
| Tax rebates | 367,573.41 | 4,448,500.00 |
| Cash generated from other operating activities | 1,055,973,163.52 | 530,824,780.80 |
| Subtotal of cash generated from operating activities | 7,281,127,029.54 | 5,004,916,342.33 |
| Payments for commodities and services | 1,620,053,478.29 | 1,103,336,566.52 |
| Cash paid to and for employees | 785,902,280.22 | 674,939,745.53 |
~ 94 ~
| Taxes paid | 2,490,592,485.18 | 1,967,147,571.63 |
| Cash used in other operating activities | 235,549,046.19 | 1,195,092,963.86 |
| Subtotal of cash used in operating activities | 5,132,097,289.88 | 4,940,516,847.54 |
| Net cash generated from/used in operating activities | 2,149,029,739.66 | 64,399,494.79 |
| 2. Cash flows from investing activities: | ||
| Proceeds from disinvestment | 306,970,000.00 | 2,200,740,054.88 |
| Return on investment | 738,058,038.36 | 846,168,044.08 |
| Net proceeds from the disposal of fixed assets, intangible assets and other long-lived assets | 5,535,791.98 | 2,760,011.69 |
| Net proceeds from the disposal of subsidiaries and other business units | ||
| Cash generated from other investing activities | ||
| Subtotal of cash generated from investing activities | 1,050,563,830.34 | 3,049,668,110.65 |
| Payments for the acquisition of fixed assets, intangible assets and other long-lived assets | 414,403,643.54 | 271,021,692.83 |
| Payments for investments | 21,800,000.00 | 716,000,000.00 |
| Net payments for the acquisition of subsidiaries and other business units | ||
| Cash used in other investing activities | ||
| Subtotal of cash used in investing activities | 436,203,643.54 | 987,021,692.83 |
| Net cash generated from/used in investing activities | 614,360,186.80 | 2,062,646,417.82 |
| 3. Cash flows from financing activities: | ||
| Capital contributions received | ||
| Borrowings raised | ||
| Cash generated from other financing activities | ||
| Subtotal of cash generated from financing activities | ||
| Repayment of borrowings | ||
| Interest and dividends paid | 755,400,000.00 | 755,400,000.00 |
~ 95 ~
| Cash used in other financing activities | ||
| Subtotal of cash used in financing activities | 755,400,000.00 | 755,400,000.00 |
| Net cash generated from/used in financing activities | -755,400,000.00 | -755,400,000.00 |
| 4. Effect of foreign exchange rates changes on cash and cash equivalents | ||
| 5. Net increase in cash and cash equivalents | 2,007,989,926.46 | 1,371,645,912.61 |
| Add: Cash and cash equivalents, beginning of the period | 2,079,818,830.20 | 708,172,917.59 |
| 6. Cash and cash equivalents, end of the period | 4,087,808,756.66 | 2,079,818,830.20 |
~ 96 ~
7. Consolidated Statements of Changes in Owners’ Equity
2020
Unit: RMB
| Item | 2020 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,888,203,911.92 | 8,944,111,764.44 | 488,042,947.30 | 9,432,154,711.74 | ||||||||
| Add: Adjustment for change in accounting policy | |||||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
~ 97 ~
| Adjustment for business combination under common control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,888,203,911.92 | 8,944,111,764.44 | 488,042,947.30 | 9,432,154,711.74 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 1,099,176,249.29 | 1,099,176,249.29 | -82,480,174.65 | 1,016,696,074.64 | |||||||||||
| 3.1 Total comprehensive income | 1,854,576,249.29 | 1,854,576,249.29 | -6,688,066.26 | 1,847,888,183.03 | |||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares |
~ 98 ~
| increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | -75,792,108.39 | -831,192,108.39 | |||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriatio | -755,400,000.00 | -755,400,000.00 | -75,792,108.39 | -831,192,108.39 |
~ 99 ~
| n to owners (or shareholders) | |||||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in |
~ 100 ~
| defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 7,987,380,161.21 | 10,043,288,013.73 | 405,562,772.65 | 10,448,850,786.38 |
~ 101 ~
2019
Unit: RMB
| Item | 2019 | ||||||||||||||
| Equity attributable to owners of the Company as the parent | Non-controlling interests | Total owners’ equity | |||||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | General reserve | Retained earnings | Other | Subtotal | |||||
| Preferred shares | Perpetual bonds | Other | |||||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,295,405,592.25 | 4,794,830.59 | 256,902,260.27 | 5,541,281,341.47 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | |||||||
| Add: Adjustment for change in accounting policy | -4,794,830.59 | 4,794,830.59 | |||||||||||||
| Adjustment for correction of previous error | |||||||||||||||
| Adjustment for business combination under common | |||||||||||||||
~ 102 ~
| control | |||||||||||||||
| Other adjustments | |||||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 5,546,076,172.06 | 7,601,984,024.58 | 427,766,092.82 | 8,029,750,117.40 | ||||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 1,342,127,739.86 | 1,342,127,739.86 | 60,276,854.48 | 1,402,404,594.34 | |||||||||||
| 3.1 Total comprehensive income | 2,097,527,739.86 | 2,097,527,739.86 | 60,276,854.48 | 2,157,804,594.34 | |||||||||||
| 3.2 Capital increased and reduced by owners | |||||||||||||||
| 3.2.1 Ordinary shares increased by owners | |||||||||||||||
| 3.2.2 Capital increased by holders of other equity |
~ 103 ~
| instruments | |||||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | |||||||||||||||
| 3.2.4 Other | |||||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.1 Appropriation to surplus reserves | |||||||||||||||
| 3.3.2 Appropriation to general reserve | |||||||||||||||
| 3.3.3 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | -755,400,000.00 | ||||||||||||
| 3.3.4 Other | |||||||||||||||
| 3.4 Transfers |
~ 104 ~
| within owners’ equity | |||||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | |||||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | |||||||||||||||
| 3.4.3 Loss offset by surplus reserves | |||||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | |||||||||||||||
| 3.4.5 Other |
~ 105 ~
| comprehensive income transferred to retained earnings | |||||||||||||||
| 3.4.6 Other | |||||||||||||||
| 3.5 Specific reserve | |||||||||||||||
| 3.5.1 Increase in the period | |||||||||||||||
| 3.5.2 Used in the period | |||||||||||||||
| 3.6 Other | |||||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,295,405,592.25 | 256,902,260.27 | 6,888,203,911.92 | 8,944,111,764.44 | 488,042,947.30 | 9,432,154,711.74 |
| Item | 2020 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury | Other comprehensive | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred | Perpetual | Other | ||||||||||
~ 106 ~
| shares | bonds | stock | income | |||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,397,131,020.62 | 8,399,693,127.97 | |||||||
| Add: Adjustment for change in accounting policy | ||||||||||||
| Adjustment for correction of previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,397,131,020.62 | 8,399,693,127.97 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 1,067,928,951.60 | 1,067,928,951.60 | ||||||||||
| 3.1 Total comprehensive income | 1,823,328,951.60 | 1,823,328,951.60 | ||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based |
~ 107 ~
| payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.1 Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to |
~ 108 ~
| retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other | ||||||||||||
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 7,465,059,972.22 | 9,467,622,079.57 |
| Item | 2019 | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: Treasury stock | Other comprehensive income | Specific reserve | Surplus reserves | Retained earnings | Other | Total owners’ equity | |||
| Preferred shares | Perpetual bonds | Other | ||||||||||
| 1. Balance as at the end of the prior year | 503,600,000.00 | 1,247,162,107.35 | 4,794,830.59 | 251,800,000.00 | 5,162,354,747.41 | 7,169,711,685.35 | ||||||
| Add: Adjustment for change in accounting policy | -4,794,830.59 | 4,794,830.59 | ||||||||||
| Adjustment for correction of | ||||||||||||
~ 109 ~
| previous error | ||||||||||||
| Other adjustments | ||||||||||||
| 2. Balance as at the beginning of the year | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 5,167,149,578.00 | 7,169,711,685.35 | |||||||
| 3. Increase/ decrease in the period (“-” for decrease) | 1,229,981,442.62 | 1,229,981,442.62 | ||||||||||
| 3.1 Total comprehensive income | 1,985,381,442.62 | 1,985,381,442.62 | ||||||||||
| 3.2 Capital increased and reduced by owners | ||||||||||||
| 3.2.1 Ordinary shares increased by owners | ||||||||||||
| 3.2.2 Capital increased by holders of other equity instruments | ||||||||||||
| 3.2.3 Share-based payments included in owners’ equity | ||||||||||||
| 3.2.4 Other | ||||||||||||
| 3.3 Profit distribution | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.1 |
~ 110 ~
| Appropriation to surplus reserves | ||||||||||||
| 3.3.2 Appropriation to owners (or shareholders) | -755,400,000.00 | -755,400,000.00 | ||||||||||
| 3.3.3 Other | ||||||||||||
| 3.4 Transfers within owners’ equity | ||||||||||||
| 3.4.1 Increase in capital (or share capital) from capital reserves | ||||||||||||
| 3.4.2 Increase in capital (or share capital) from surplus reserves | ||||||||||||
| 3.4.3 Loss offset by surplus reserves | ||||||||||||
| 3.4.4 Changes in defined benefit schemes transferred to retained earnings | ||||||||||||
| 3.4.5 Other comprehensive income transferred to retained earnings | ||||||||||||
| 3.4.6 Other |
~ 111 ~
| 3.5 Specific reserve | ||||||||||||
| 3.5.1 Increase in the period | ||||||||||||
| 3.5.2 Used in the period | ||||||||||||
| 3.6 Other | ||||||||||||
| 4. Balance as at the end of the period | 503,600,000.00 | 1,247,162,107.35 | 251,800,000.00 | 6,397,131,020.62 | 8,399,693,127.97 |
~ 112 ~
Anhui Gujing Distillery Co., Ltd.Notes to the Financial StatementsFor the year ended 31 December 2020（All amounts are expressed in Renminbi Yuan (“CNY”) unless otherwise stated）
1. BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporate Information
Anhui Gujing Distillery Co., Ltd. (hereinafter “the Company” or "Company") was approvedby Anhui State-owned Assets Administration by WanGuoZiGongZi (1996) NO. 053. AnhuiGujing Group Co., Ltd. was the sole sponsor of the Company. The Company wasestablished by converting the net assets of the main production and operating assets of itscore enterprise Anhui Bozhou Gujing Distillery into 155 million shares of state-ownedshares with a net value of 377.1677 million yuan. The registered place of the Company isBozhou City, Anhui Province, People's Republic of China. The Company was establishedon March 5, 1996 with the approval of Anhui Secretary of Government (1996) No. 42 by theAnhui Provincial People's Government. The Company started its founding meeting on May28, 1996, and registered with the Anhui Provincial Administration for Industry andCommerce on May 30, 1996.The Company issued 60 million foreign-oriented shares for domestic listing (hereinafter “B”shares) in June 1996 and 20 million domestic listed CNY ordinary shares (hereinafter “A”shares) in September 1996, the par value of ordinary shares is CNY 1 per share. Both Ashare and B share are listed on Shenzhen Stock exchange.The headquarters of the Company is located in Gujing town, Bozhou city, Anhui province.The Company and the subsidiaries (collectively called “Group”) is mainly engaged in liquorproduction and sales; it belongs to the food manufacturing industry.The original registered capital was CNY 235 million, the total amount of shares was 235million, including state-owned shares 155 million, “B” shares 60 million, “A” shares 20million with the par value of CNY 1 per share.On May 29, 2006, the shareholder meeting for the Company’s split share structure reformof A-share market has discussed and approved the proposal of the split share structure
~ 113 ~
reform, and the reform was implemented in June 2006. After the implementation of theCompany’s split share structure reform, all shares of the Company became tradableshares, which included 147,000,000shares with restrictions on disposal, representing
62.55% of total share capital, and 88,000,000 shares without restrictions on disposal,representing 37.45% of total share capital.On June 27, 2007, the Company issued the Announcement of release restriction sharesby Anhui Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with therestricted condition on disposal became non-restricted in the stock market, and theconversion date is June 29, 2007. Hence, outstanding shares with the restrict condition ondisposal are 135,250,000 shares, representing 57.55% of total share capital, the sharewithout restricting condition on disposal are 99,750,000 shares, representing 42.45% oftotal share capital.On July 17, 2008, the Company issued the Announcement of release restriction shares byAnhui Gujing Distillery Co., Ltd., the 11,750,000 restricted outstanding shares with therestricted condition on disposal became non-restricted in the stock market, and theconversion date is on July 18, 2008. Hence, outstanding shares with the restrictedcondition on disposal were 123,500,000 shares, representing 52.55% of total sharecapital, the share without restricting condition on disposal are 111,500,000 shares,representing 47.45% of total share capital.On July 24, 2009, the Company issued the Announcement of release restriction shares byAnhui Gujing Distillery Co., Ltd., the 123,500,000 restricted outstanding shares with therestricted condition on disposal became non-restricted in the stock market, and theconversion date was on July 29, 2009. Hence, all shares of the Company becameoutstanding shares without restricted condition on disposal.According to the approval by China Securities Regulatory Commission (the authorizationfile No. zhengjianxuke[2011]943), on July 15, 2011, the Company privately issued16,800,000 shares of ordinary share (A shares) to specific investors, the par value wasCNY 1 per share, and the offering price was CNY 75 per share, the funds raised amountedto CNY 1,260 million. After deducting the sundry issuing charges amounting to CNY32,500,549.73, the actual funds raised amounted to CNY 1,227,499,450.27. The positionof the above raised funds has been verified by Reanda Certified Public Accountants Co.,Ltd. with a Capital Verification Report (REANDA YAN ZI[2011]No.1065). After thenon-public issuance, the share capital of the Company increased to CNY 251.80 million.
~ 114 ~
According to the resolution of 2011 annual general meeting of stockholders, the Companyconverted 10 shares for each10 shares from capital reserves based on the 251.80 millionshares on 31 December 2011, the total number of converted shares was 251.80 million,and the transfer was implemented in 2012. After the conversion, the registered capitalincreased to CNY 503.60 million.As of 31 December 2019, the accumulated number of issued share capital was 503.60million shares. See Note 5.30.The Company registered in Gujing town, Bozhou city, Anhui province.The approved business scope of the Company: grain procurement (operation bylicense), production of distilled spirits, brewing equipment, packaging materials, glassbottles, alcohol, grease (limited to the by-products from alcohol production), high-techdevelopment, biotechnology development, deep processing of agricultural and sidelineproducts, sales of self-produced products.The parent company of the Company and ultimate parent company is Anhui Gujing GroupCo., Ltd. incorporated in China.The financial statements were approved and authorized for issue, upon the resolution ofthe Company’s Board of Directors meeting on 29 April 2021.
1.2 Scope of Consolidation
(a) Incorporated subsidiaries of the CompanyAt 31 December 2020, subsidiaries of the Company are as follows:
| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 1 | Bozhou Gujing Sales Co., Ltd. | Gujing Sales | 100.00 | - |
| 2 | Anhui Jinyunlai Culture & Media Co., Ltd. | Jinyunlai | 100.00 | - |
| 3 | Anhui Ruisiweier Technology Co., Ltd. | Ruisiweier | 100.00 | - |
| 4 | Anhui Longrui Glass Co., Ltd. | Longrui Glass | 100.00 | - |
| 5 | Bozhou Gujing Waste Recycling Co., Ltd. | Gujing Waste | 100.00 | - |
~ 115 ~
| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 6 | Shanghai Gujing Jinhao hotel management company | Jinhao Hotel | 100.00 | - |
| 7 | Bozhou Gujing hotel Co., Ltd | Gujing Hotel | 100.00 | - |
| 8 | Anhui Yuanqing environmental protection Co., Ltd. | Yuanqing Environmental Protection | 100.00 | - |
| 9 | Anhui Gujing Yunshang Electronic Commerce Co., Ltd | Gujing Electronic Commerce | 100.00 | - |
| 10 | Anhui Zhenrui Construction Engineering Co., Ltd | Zhenrui Construction Engineering | 100.00 | - |
| 11 | Anhui RunanxinkeTesting Tech. Co., Ltd. | Runanxinke Testing | 100.00 | - |
| 12 | Anhui Jiudao Culture Media Co., Ltd. | Jiudao Culture | 100.00 | |
| 13 | Yellow Crane Tower Wine Co., Ltd | Yellow Crane Tower Wine | 51.00 | - |
| 14 | Yellow Crane Tower Wine (Suizhou) Co., Ltd | Suizhou Yellow Crane Tower | - | 51.00 |
| 15 | Hubei Junlou Cultural Tourism Co., Ltd. | Junlou Culture | - | 51.00 |
| 16 | Hubei Yellow Crane Tower Beverage Co., Ltd. | Yellow Crane Tower Beverage | - | 51.00 |
| 17 | Yellow Crane Tower Wine (Xianning) Co., Ltd. | Xianning Yellow Crane Tower | - | 51.00 |
| 18 | Wuhan Yashibo tech. Co., Ltd. | Yashibo | - | 51.00 |
| 19 | Hubei Xinjia Testing Technology Co., Ltd. | Xinjia Testing | - | 51.00 |
| 20 | Wuhan Tianlong Jindi Technology Development Co., Ltd. | Tianlong Jindi | - | 51.00 |
| 21 | Wuhan Junya Sales Co., Ltd. | Junya Sales | - | 51.00 |
~ 116 ~
| Sequence Number | Name of Subsidiaries | Abbreviation of Subsidiaries | Proportion of Shareholding (or similar equity interest) (%) | |
| Direct | Indirect | |||
| 22 | Xianning Junhe Sales Co., Ltd. | Xianning Junhe | - | 51.00 |
| 23 | Suizhou Junhe Commercial Co., Ltd. | Suizhou Junhe | - | 51.00 |
~ 117 ~
3. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATESThe following significant accounting policies and accounting estimates of the Company areformulated in accordance with the Accounting Standards for Business Enterprises.Businesses not mentioned are complied with relevant accounting policies of the AccountingStandards for Business Enterprises.
3.1 Statement of Compliance with the Accounting Standards for BusinessEnterprisesThe Company prepares its financial statements in accordance with the requirements of theAccounting Standards for Business Enterprises, truly and completely reflecting theCompany’s financial position as at 31 December 2020, and its operating results, changes inshareholders' equity, cash flows and other related information for the year then ended.
3.2 Accounting Period
The accounting year of the Company is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
The normal operating cycle of the Company is twelve months.
3.4 Functional Currency
The Company takes Renminbi Yuan (“CNY”) as the functional currency.The Company’s overseas subsidiaries choose the currency of the primary economicenvironment in which the subsidiaries operate as the functional currency.
3.5 Accounting Treatment of Business Combinations under and not under CommonControl(a) Business combinations under common controlThe assets and liabilities that the Company obtains in a business combination undercommon control shall be measured at their carrying amount of the acquired entity at thecombination date. If the accounting policy adopted by the acquired entity is different fromthat adopted by the acquiring entity, the acquiring entity shall, according to accountingpolicy it adopts, adjust the relevant items in the financial statements of the acquired partybased on the principal of materiality. As for the difference between the carrying amount ofthe net assets obtained by the acquiring entity and the carrying amount of the consideration
~ 118 ~
paid by it, the capital reserve (capital premium or share premium) shall be adjusted. If thecapital reserve (capital premium or share premium) is not sufficient to absorb the difference,any excess shall be adjusted against retained earnings.For the accounting treatment of business combination under common control by stepacquisitions, please refer to Note 3.6 (f).(b) Business combinations not under common controlThe assets and liabilities that the Company obtains in a business combination not undercommon control shall be measured at their fair value at the acquisition date. If theaccounting policy adopted by the acquired entity is different from that adopted by theacquiring entity, the acquiring entity shall, according to accounting policy it adopts, adjustthe relevant items in the financial statements of the acquired entity based on the principal ofmateriality. The acquiring entity shall recognise the positive balance between thecombination costs and the fair value of the identifiable net assets it obtains from theacquired entity as goodwill. The acquiring entity shall, pursuant to the following provisions,treat the negative balance between the combination costs and the fair value of theidentifiable net assets it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets, liabilities andcontingent liabilities it obtains from the acquired entity as well as the combination costs;(ii) If, after the review, the combination costs are still less than the fair value of theidentifiable net assets it obtains from the acquired entity, the balance shall be recognised inprofit or loss of the reporting period.For the accounting treatment of business combination under the same control by stepacquisitions, please refer to Note 3.6 (f).(c) Treatment of business combination related costsThe intermediary costs such as audit, legal services and valuation consulting and otherrelated management costs that are directly attributable to the business combination shallbe charged in profit or loss in the period in which they are incurred. The costs to issueequity or debt securities for the consideration of business combination shall be recorded asa part of the value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements(a) Scope of consolidation
~ 119 ~
The scope of consolidated financial statements shall be determined on the basis of control.It not only includes subsidiaries determined based on voting power (or similar) or otherarrangement, but also structured entities under one or several contract arrangements.Control exists when the Company has all the following: power over the investee; exposure,or rights to variable returns from the Company’s involvement with the investee; and theability to use its power over the investee to affect the amount of the investor’s returns.Subsidiaries are the entities that controlled by the Company (including enterprise, adivisible part of the investee, and structured entity controlled by the enterprise). A structuredentity (sometimes called a Special Purpose Entity) is an entity that has been designed sothat voting or similar rights are not the dominant factor in deciding who controls the entity.(b) Special requirement as the parent company is an investment entityIf the parent company is an investment entity, it should measure its investments inparticular subsidiaries as financial assets at fair value through profit or loss instead ofconsolidating those subsidiaries in its consolidated and separate financial statements.However, as an exception to this requirement, if a subsidiary provides investment-relatedservices or activities to the investment entity, it should be consolidated.The parent company is defined as investment entity when meets following conditions:
a. Obtains funds from one or more investors for the purpose of providing those investorswith investment management services;b. Commits to its investors that its business purpose is to invest funds solely for returnsfrom capital appreciation, investment income or both; andc. Measures and evaluates the performance of substantially all of its investments on a fairvalue basis.If the parent company becomes an investment entity, it shall cease to consolidate itssubsidiaries at the date of the change in status, except for any subsidiary which providesinvestment-related services or activities to the investment entity shall be continued to beconsolidated. The deconsolidation of subsidiaries is accounted for as though theinvestment entity partially disposed subsidiaries without loss of control.When the parent company previously classified as an investment entity ceases to be aninvestment entity, subsidiary that was previously measured at fair value through profit orloss shall be included in the scope of consolidated financial statements at the date of the
~ 120 ~
change in status. The fair value of the subsidiary at the date of change represents thetransferred deemed consideration in accordance with the accounting for businesscombination not under common control.(c) Method of preparing the consolidated financial statementsThe consolidated financial statements shall be prepared by the Company based on thefinancial statements of the Company and its subsidiaries, and using other relatedinformation.When preparing consolidated financial statements, the Company shall consider the entiregroup as an accounting entity, adopt uniform accounting policies and apply therequirements of Accounting Standard for Business Enterprises related to recognition,measurement and presentation. The consolidated financial statements shall reflect theoverall financial position, operating results and cash flows of the group.(i) Like items of assets, liabilities, equity, income, expenses and cash flows of the parent arecombined with those of the subsidiaries.(ii) The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set)against the parent’s portion of equity of each subsidiary.(iii) Eliminate the impact of intragroup transactions between the Company and thesubsidiaries or between subsidiaries, and when intragroup transactions indicate animpairment of related assets, the losses shall be recognised in full.(iv) Make adjustments to special transactions from the perspective of the group.(d) Method of preparation of the consolidated financial statements when subsidiariesare acquired or disposed in the reporting period(i) Acquisition of subsidiaries or businessSubsidiaries or business acquired through business combination under common controlWhen preparing consolidated statements of financial position, the opening balance of theconsolidated balance sheet shall be adjusted. Related items of comparative financialstatements shall be adjusted as well, deeming that the combined entity has always existedever since the ultimate controlling party began to control.Incomes, expenses and profits of the subsidiary incurred from the beginning of thereporting period to the end of the reporting period shall be included into the consolidated
~ 121 ~
statement of profit or loss. Related items of comparative financial statements shall beadjusted as well, deeming that the combined entity has always existed ever since theultimate controlling party began to control.Cash flows from the beginning of the reporting period to the end of the reporting periodshall be included into the consolidated statement of cash flows. Related items ofcomparative financial statements shall be adjusted as well, deeming that the combinedentity has always existed ever since the ultimate controlling party began to control.Subsidiaries or business acquired through business combination not under common controlWhen preparing the consolidated statements of financial position, the opening balance ofthe consolidated statements of financial position shall not be adjusted.Incomes, expenses and profits of the subsidiary incurred from the acquisition date to theend of the reporting period shall be included into the consolidated statement of profit orloss.Cash flows from the acquisition date to the end of the reporting period shall be included intothe consolidated statement of cash flows.(ii) Disposal of subsidiaries or businessWhen preparing the consolidated statements of financial position, the opening balance ofthe consolidated statements of financial position shall not be adjusted.Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposaldate shall be included into the consolidated statement of profit or loss.Cash flows from the beginning of the subsidiary to the disposal date shall be included intothe consolidated statement of cash flows.(e) Special consideration in consolidation elimination(i) Long-term equity investment held by the subsidiaries to the Company shall berecognised as treasury stock of the Company, which is offset with the owner’s equity,represented as “treasury stock” under “owner’s equity” in the consolidated statement offinancial position.Long-term equity investment held by subsidiaries between each other is accounted fortaking long-term equity investment held by the Company to its subsidiaries as reference.That is, the long-term equity investment is eliminated (off- set) against the portion of the
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corresponding subsidiary’s equity.(ii) Due to not belonging to paid-in capital (or share capital) and capital reserve, and beingdifferent from retained earnings and undistributed profit, “Specific reserves” and “Generalrisk provision” shall be recovered based on the proportion attributable to owners of theparent company after long-term equity investment to the subsidiaries is eliminated with thesubsidiaries’ equity.(iii) If temporary timing difference between the book value of the assets and liabilities in theconsolidated statement of financial position and their tax basis is generated as a result ofelimination of unrealized inter-company transaction profit or loss, deferred tax assets ofdeferred tax liabilities shall be recognised, and income tax expense in the consolidatedstatement of profit or loss shall be adjusted simultaneously, excluding deferred taxesrelated to transactions or events directly recognised in owner’s equity or businesscombination.(iv) Unrealised inter-company transactions profit or loss generated from the Companyselling assets to its subsidiaries shall be eliminated against “net profit attributed to theowners of the parent company” in full. Unrealized inter-company transactions profit or lossgenerated from the subsidiaries selling assets to the Company shall be eliminated between“net profit attributed to the owners of the parent company” and “non-controlling interests”pursuant to the proportion of the Company in the related subsidiaries. Unrealizedinter-company transactions profit or loss generated from the assets sales between thesubsidiaries shall be eliminated between “net profit attributed to the owners of the parentcompany” and “non-controlling interests” pursuant to the proportion of the Company in theselling subsidiaries.(v) If loss attributed to the minority shareholders of a subsidiary in current period is morethan the proportion of non-controlling interest in this subsidiary at the beginning of theperiod, non-controlling interest is still to be written down.(f) Accounting for Special Transactions(i) Purchasing of non-controlling interestsWhere, the Company purchases non-controlling interests of its subsidiary, in the separatefinancial statements of the Company, the cost of the long-term equity investment obtainedin purchasing non-controlling interests is measured at the fair value of the considerationpaid. In the consolidated financial statements, difference between the cost of the long-term
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equity investment newly obtained in purchasing non-controlling interests and share of thesubsidiary’s net assets from the acquisition date or combination date continuinglycalculated pursuant to the newly acquired shareholding proportion shall be adjusted intocapital reserve (capital premium or share premium). If capital reserve is not enough to beoffset, surplus reserve and undistributed profit shall be offset in turn.(ii) Gaining control over the subsidiary in stages through multiple transactionsBusiness combination under common control in stages through multiple transactionsOn the combination date, in the separate financial statement, initial cost of the long-termequity investment is determined according to the share of carrying amount of the acquiree’snet assets in the ultimate controlling entity’s consolidated financial statements aftercombination. The difference between the initial cost of the long-term equity investment andthe carrying amount of the long -term investment held prior of control plus book value ofadditional consideration paid at acquisition date is adjusted into capital reserve (capitalpremium or share premium). If the capital reserve is not enough to absorb the difference,any excess shall be adjusted against surplus reserve and undistributed profit in turn.In the consolidated financial statements, the assets and liabilities acquired during thecombination should be recognized at their carrying amount in the ultimate controllingentity’s consolidated financial statements on the combination date unless any adjustment isresulted from the difference in accounting policies. The difference between the carryingamount of the investment held prior of control plus book value of additional considerationpaid on the acquisition date and the net assets acquired through the combination isadjusted into capital reserve (capital premium or share premium). If the capital reserve isnot enough to absorb the difference, any excess shall be adjusted against retainedearnings.If the acquiring entity holds equity investment in the acquired entity prior to the combinationdate and the equity investment is accounted for under the equity method, related profit orloss, other comprehensive income and other changes in equity which have beenrecognised during the period from the later of the date of the Company obtaining originalequity interest and the date of both the acquirer and the acquiree under common control ofthe same ultimate controlling party to the combination date should be offset against theopening balance of retained earnings at the comparative financial statements periodrespectively.
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Business combination not under common control in stages through multiple transactionsOn the consolidation date, in the separate financial statements, the initial cost of long-termequity investment is determined according to the carrying amount of the original long-terminvestment plus the cost of new investment.In the consolidated financial statements, the equity interest of the acquired entity held priorto the acquisition date shall be re-measured at its fair value on the acquisition date.Difference between the fair value of the equity interest and its book value is recognised asinvestment income. The other comprehensive income related to the equity interest heldprior to the acquisition date calculated through equity method, should be transferred tocurrent investment income of the acquisition period, excluding other comprehensiveincome resulted from the remeasurement of the net assets or net liabilities under definedbenefit plan. The Company shall disclose acquisition-date fair value of the equity interestheld prior to the acquisition date, and the related gains or losses due to the remeasurementbased on fair value.(iii) Disposal of investment in subsidiaries without a loss of controlFor partial disposal of the long-term equity investment in the subsidiaries without a loss ofcontrol, when the Company prepares consolidated financial statements, differencebetween consideration received from the disposal and the corresponding share ofsubsidiary’s net assets cumulatively calculated from the acquisition date or combinationdate shall be adjusted into capital reserve (capital premium or share premium). If the capitalreserve is not enough to absorb the difference, any excess shall be offset against retainedearnings.(iv) Disposal of investment in subsidiaries with a loss of controlDisposal through one transactionIf the Company loses control in an investee through partial disposal of the equityinvestment, when the consolidated financial statements are prepared, the retained equityinterest should be re-measured at fair value at the date of loss of control. The differencebetween i) the fair value of consideration received from the disposal plus non-controllinginterest retained; ii) share of the former subsidiary’s net assets cumulatively calculated fromthe acquisition date or combination date according to the original proportion of equityinterest, shall be recognised in current investment income when control is lost.
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Moreover, other comprehensive income and other changes in equity related to the equityinvestment in the former subsidiary shall be transferred into current investment incomewhen control is lost, excluding other comprehensive income resulted from theremeasurement of the movement of net assets or net liabilities under defined benefit plan.Disposal in stagesIn the consolidated financial statements, whether the transactions should be accounted foras “a single transaction” needs to be decided firstly.If the disposal in stages should not be classified as “a single transaction”, in the separatefinancial statements, for transactions prior of the date of loss of control, carrying amount ofeach disposal of long-term equity investment need to be recognized, and the differencebetween consideration received and the carrying amount of long-term equity investmentcorresponding to the equity interest disposed should be recognized in current investmentincome; in the consolidated financial statements, the disposal transaction should beaccounted for according to related policy in “Disposal of long-term equity investment insubsidiaries without a loss of control”.If the disposal in stages should be classified as “a single transaction”, these transactionsshould be accounted for as a single transaction of disposal of subsidiary resulting in loss ofcontrol. In the separate financial statements, for each transaction prior of the date of loss ofcontrol, difference between consideration received and the carrying amount of long-termequity investment corresponding to the equity interest disposed should be recognised asother comprehensive income firstly, and transferred to profit or loss as a whole whencontrol is lost; in the consolidated financial statements, for each transaction prior of the dateof loss of control, difference between consideration received and proportion of thesubsidiary’s net assets corresponding to the equity interest disposed should be recognisedin profit or loss as a whole when control is lost.In considering of the terms and conditions of the transactions as well as their economicimpact, the presence of one or more of the following indicators may lead to account formultiple transactions as a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.(b) The transactions form a single transaction designed to achieve an overall commercialeffect.
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(c) The occurrence of one transaction depends on the occurrence of at least one othertransaction.(d) One transaction, when considered on its own merits, does not make economic sense,but when considered together with the other transaction or transactions would beconsidered economically justifiable.(v) Diluting equity share of parent company in its subsidiaries due to additional capitalinjection by the subsidiaries’ minority shareholders.Other shareholders (minority shareholders) of the subsidiaries inject additional capital inthe subsidiaries, which resulted in the dilution of equity interest of parent company in thesesubsidiaries. In the consolidated financial statements, difference between share of thecorresponding subsidiaries’ net assets calculated based on the parent’s equity interestbefore and after the capital injection shall be adjusted into capital reserve (capital premiumor share premium). If the capital reserve is not enough to absorb the difference, any excessshall be adjusted against retained earnings.
3.7 Classification of Joint Arrangements and Accounting for Joint OperationA joint arrangement is an arrangement of which two or more parties have joint control. Jointarrangement of the Company is classified as either a joint operation or a joint venture.(a) Joint operationA joint operation is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the assets, and obligations for the liabilities, relating to thearrangement.The Company shall recognise the following items in relation to shared interest in a jointoperation, and account for them in accordance with relevant accounting standards of theAccounting Standards for Business Enterprises:
(i) its assets, including its share of any assets held jointly;(ii) its liabilities, including its share of any liabilities incurred jointly;(iii) its revenue from the sale of its share of the output arising from the joint operation;(iv) its share of the revenue from the sale of the output by the joint operation; and(v) its expenses, including its share of any expenses incurred jointly.
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(b) Joint ventureA joint venture is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement.The Company accounts for its investment in the joint venture by applying the equity methodof long-term equity investment.
3.8 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand.Cash equivalents include short-term (generally within three months of maturity atacquisition), highly liquid investments that are readily convertible into known amounts ofcash and which are subject to an insignificant risk of changes in value.
3.9 Foreign Currency Transactions and Translation of Foreign Currency FinancialStatements(a) Determination of the exchange rate for foreign currency transactionsAt the time of initial recognition of a foreign currency transaction, the amount in the foreigncurrency shall be translated into the amount in the functional currency at the spot exchangerate of the transaction date, or at an exchange rate which is determined through asystematic and reasonable method and is approximate to the spot exchange rate of thetransaction date (hereinafter referred to as the approximate exchange rate).(b) Translation of monetary items denominated in foreign currency on the balancesheet dateThe foreign currency monetary items shall be translated at the spot exchange rate on thebalance sheet date. The balance of exchange arising from the difference between the spotexchange rate on the balance sheet date and the spot exchange rate at the time of initialrecognition or prior to the balance sheet date shall be recorded into the profits and losses atthe current period. The foreign currency non-monetary items measured at the historical costshall still be translated at the spot exchange rate on the transaction date; for the foreigncurrency non-monetary items restated to a fair value measurement, shall be translated intothe at the spot exchange rate at the date when the fair value was determined, the differencebetween the restated functional currency amount and the original functional currencyamount shall be recorded into the profits and losses at the current period.
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(c) Translation of foreign currency financial statementsBefore translating the financial statements of foreign operations, the accounting period andaccounting policy shall be adjusted so as to conform to the Company. The adjusted foreignoperation financial statements denominated in foreign currency (other than functionalcurrency) shall be translated in accordance with the following method:
(i) The asset and liability items in the statement of financial position shall be translated atthe spot exchange rates at the date of that statement of financial position.. The owners’equity items except undistributed profit shall be translated at the spot exchange rates whenthey are incurred.(ii) The income and expense items in the statement of profit and other comprehensiveincome shall be translated at the spot exchange rates or approximate exchange rate at thedate of transaction.(iii) Foreign currency cash flows and cash flows of foreign subsidiaries shall be translatedat the spot exchange rate or approximate exchange rate when the cash flows are incurred.The effect of exchange rate changes on cash is presented separately in the statement ofcash flows as an adjustment item.(iv) The differences arising from the translation of foreign currency financial statementsshall be presented separately as “other comprehensive income” under the owners’ equityitems of the consolidated statement of financial position.When disposing a foreign operation involving loss of control, the cumulative amount of theexchange differences relating to that foreign operation recognised under othercomprehensive income in the statement of financial position, shall be reclassified intocurrent profit or loss according to the proportion disposed.
3.10 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entityand a financial liability or equity instrument of another entity.(a) Recognition and derecognition of financial instrumentA financial asset or a financial liability should be recognised in the statement of financialposition when, and only when, an entity becomes party to the contractual provisions of theinstrument.
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A financial asset can only be derecognised when meets one of the following conditions:
(i) The rights to the contractual cash flows from a financial asset expire(ii) The financial asset has been transferred and meets one of the following derecognitionconditions:
Financial liabilities (or part thereof) are derecognised only when the liability isextinguished—i.e., when the obligation specified in the contract is discharged or cancelledor expires. An exchange of the Company (borrower) and lender of debt instruments thatcarry significantly different terms or a substantial modification of the terms of an existingliability are both accounted for as an extinguishment of the original financial liability and therecognition of a new financial liability.Purchase or sale of financial assets in a regular-way shall be recognised and derecognisedusing trade date accounting. A regular-way purchase or sale of financial assets is atransaction under a contract whose terms require delivery of the asset within the time frameestablished generally by regulations or convention in the market place concerned. Tradedate is the date at which the entity commits itself to purchase or sell an asset.(b) Classification and measurement of financial assetsAt initial recognition, the Company classified its financial asset based on both the businessmodel for managing the financial asset and the contractual cash flow characteristics of thefinancial asset: financial asset at amortised cost, financial asset at fair value through profitor loss (FVTPL) and financial asset at fair value through other comprehensive income(FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective of theentity’s business model for managing those financial assets changes. In this circumstance,all affected financial assets shall be reclassified on the first day of the first reporting periodafter the changes in business model; otherwise the financial assets cannot be reclassifiedafter initial recognition.Financial assets shall be measured at initial recognition at fair value. For financial assetsmeasured at FVTPL, transaction costs are recognised in current profit or loss. For financialassets not measured at FVTPL, transaction costs should be included in the initialmeasurement. Notes receivable or accounts receivable that arise from sales of goods orrendering of services are initially measured at the transaction price defined in theaccounting standard of revenue where the transaction does not include a significantfinancing component.
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Subsequent measurement of financial assets will be based on their categories:
(i) Financial asset at amortised costThe financial asset at amortised cost category of classification applies when both thefollowing conditions are met: the financial asset is held within the business model whoseobjective is to hold financial assets in order to collect contractual cash flows, and thecontractual term of the financial asset gives rise on specified dates to cash flows that aresolely payment of principal and interest on the principal amount outstanding. Thesefinancial assets are subsequently measured at amortised cost by adopting the effectiveinterest rate method. Any gain or loss arising from derecognition according to theamortization under effective interest rate method or impairment are recognised in currentprofit or loss.(ii)Financial asset at fair value through other comprehensive income (FVTOCI)The financial asset at FVTOCI category of classification applies when both the followingconditions are met: the financial asset is held within the business model whose objective isachieved by both collecting contractual cash flows and selling financial assets, and thecontractual term of the financial asset gives rise on specified dates to cash flows that aresolely payment of principle and interest on the principal amount outstanding. All changes infair value are recognised in other comprehensive income except for gain or loss arisingfrom impairment or exchange differences, which should be recognised in current profit orloss. At derecognition, cumulative gain or loss previously recognised under OCI isreclassified to current profit or loss. However, interest income calculated based on theeffective interest rate is included in current profit or loss.The Company make an irrevocable decision to designate part of non-trading equityinstrument investments as measured through FVTOCI. All changes in fair value arerecognised in other comprehensive income except for dividend income recognised incurrent profit or loss. At derecognition, cumulative gain or loss are reclassified to retainedearnings.(iii)Financial asset at fair value through profit or loss (FVTPL)Financial asset except for above mentioned financial asset at amortised cost or financialasset at fair value through other comprehensive income (FVTOCI), should be classified asfinancial asset at fair value through profit or loss (FVTPL). These financial assets should besubsequently measured at fair value. All the changes in fair value are included in current
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profit or loss.(c) Classification and measurement of financial liabilitiesThe Company classified the financial liabilities as financial liabilities at fair value throughprofit or loss (FVTPL), loan commitments at a below-market interest rate and financialguarantee contracts and financial asset at amortised cost.Subsequent measurement of financial assets will be based on the classification:
(i)Financial liabilities at fair value through profit or loss (FVTPL)Held-for-trading financial liabilities (including derivatives that are financial liabilities) andfinancial liabilities designated at FVTPL are classified as financial liabilities at FVTP. Afterinitial recognition, any gain or loss (including interest expense) are recognised in currentprofit or loss except for those hedge accounting is applied. For financial liability that isdesignated as at FVTPL, changes in the fair value of the financial liability that is attributableto changes in the own credit risk of the issuer shall be presented in other comprehensiveincome. At derecognition, cumulative gain or loss previously recognised under OCI isreclassified to retained earnings.(ii)Loan commitments and financial guarantee contractsLoan commitment is a commitment by the Company to provide a loan to customer underspecified contract terms. The provision of impairment losses of loan commitments shall berecognised based on expected credit losses model.Financial guarantee contract is a contract that requires the Company to make specifiedpayments to reimburse the holder for a loss it incurs because a specified debtor fails tomake payment when due in accordance with the original or modified terms of a debtinstrument. Financial guarantee contracts liability shall be subsequently measured at thehigher of: The amount of the loss allowance recognised according to the impairmentprinciples of financial instruments; and the amount initially recognised less the cumulativeamount of income recognised in accordance with the revenue principles.(iii)Financial liabilities at amortised costAfter initial recognition, the Company measured other financial liabilities at amortised costusing the effective interest method.Except for special situation, financial liabilities and equity instrument should be classified inaccordance with the following principles:
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(i) If the Company has no unconditional right to avoid delivering cash or another financialinstrument to fulfill a contractual obligation, this contractual obligation meet the definition offinancial liabilities. Some financial instruments do not comprise terms and conditionsrelated to obligations of delivering cash or another financial instrument explicitly, they mayinclude contractual obligation indirectly through other terms and conditions.(ii) If a financial instrument must or may be settled in the Company's own equity instruments,it should be considered that the Company’s own equity instruments are alternatives of cashor another financial instrument, or to entitle the holder of the equity instruments to sharingthe remaining rights over the net assets of the issuer. If the former is the case, theinstrument is a liability of the issuer; otherwise, it is an equity instrument of the issuer.Under some circumstances, it is regulated in the contract that the financial instrument mustor may be settled in the Company's own equity instruments, where, amount of contractualrights and obligations are calculated by multiplying the number of the equity instruments tobe available or delivered by its fair value upon settlement. Such contracts shall be classifiedas financial liabilities, regardless that the amount of contractual rights and liabilities is fixed,or fluctuate totally or partially with variables other than market price of the entity’s ownequity instruments(d) Derivatives and embedded derivativesAt initial recognition, derivatives shall be measured at fair value at the date of derivativecontracts are signed and subsequently measured at fair value. The derivative with apositive fair value shall be recognized as an asset, and with a negative fair value shall berecognised as a liability.Gains or losses arising from the changes in fair value of derivatives shall be recogniseddirectly into current profit or loss except for the effective portion of cash flow hedges whichshall be recognised in other comprehensive income and reclassified into current profit orloss when the hedged items affect profit or loss.An embedded derivative is a component of a hybrid contract with a financial asset as a host,the Company shall apply the requirements of financial asset classification to the entirehybrid contract. If a host that is not a financial asset and the hybrid contract is not measuredat fair value with changes in fair value recognised in profit or loss, and the economiccharacteristics and risks of the embedded derivative are not closely related to the economiccharacteristics and risks of the host, and a separate instrument with the same terms as theembedded derivative would meet the definition of a derivative, the embedded derivative
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shall be separated from the hybrid instrument and accounted for as a separate derivativeinstrument. If the Company is unable to measure the fair value of the embedded derivativeat the acquisition date or subsequently at the balance sheet date, the entire hybrid contractis designated as financial assets or financial liabilities at fair value through profit or loss.(e) Impairment of financial instrumentThe Company shall recognise a loss allowance based on expected credit losses on afinancial asset that is measured at amortised cost, a debt investment at fair value throughother comprehensive income, a contract asset, a lease receivable, a loan commitment anda financial guarantee contract.(i) Measurement of expected credit lossesExpected credit losses are the weighted average of credit losses of the financialinstruments with the respective risks of a default occurring as the weights. Credit loss is thedifference between all contractual cash flows that are due to the Company in accordancewith the contract and all the cash flows that the Company expects to receive, discounted atthe original effective interest rate or credit- adjusted effective interest rate for purchased ororiginated credit-impaired financial assets.Lifetime expected credit losses are the expected credit losses that result from all possibledefault events over the expected life of a financial instrument.12-month expected credit losses are the portion of lifetime expected credit losses thatrepresent the expected credit losses that result from default events on a financialinstrument that are possible within the 12 months after the reporting date (or the expectedlifetime, if the expected life of a financial instrument is less than 12 months).At each reporting date, the Company classifies financial instruments into three stages andmakes provisions for expected credit losses accordingly. A financial instrument of which thecredit risk has not significantly increased since initial recognition is at stage 1. TheCompany shall measure the loss allowance for that financial instrument at an amount equalto 12-month expected credit losses. A financial instrument with a significant increase incredit risk since initial recognition but is not considered to be credit-impaired is at stage 2.The Company shall measure the loss allowance for that financial instrument at an amountequal to the lifetime expected credit losses. A financial instrument is considered to becredit-impaired as at the end of the reporting period is at stage 3. The Company shallmeasure the loss allowance for that financial instrument at an amount equal to the lifetime
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expected credit losses.The Company may assume that the credit risk on a financial instrument has not increasedsignificantly since initial recognition if the financial instrument is determined to have lowcredit risk at the reporting date and measure the loss allowance for that financial instrumentat an amount equal to 12-month expected credit losses.For financial instrument at stage 1, stage 2 and those have low credit risk, the interestrevenue shall be calculated by applying the effective interest rate to the gross carryingamount of a financial asset. For financial instrument at stage 3, interest revenue shall becalculated by applying the effective interest rate to the amortised cost after deducting ofimpairment loss.For notes receivable, accounts receivable and accounts receivable financing, no matter itcontains a significant financing component or not, the Company shall measure the lossallowance at an amount equal to the lifetime expected credit losses.ReceivablesFor the notes receivable, accounts receivable, other receivables, accounts receivablefinancing and long-term receivables which are demonstrated to be impaired by anyobjective evidence, or applicable for individual assessment, the Company shall individuallyassess for impairment and recognise the loss allowance for expected credit losses. If theCompany determines that no objective evidence of impairment exists for notes receivable,accounts receivable, other receivables, accounts receivable financing and long-termreceivables, or the expected credit loss of a single financial asset cannot be assessed atreasonable cost, such notes receivable, accounts receivable, other receivables, accountsreceivable financing and long-term receivables shall be divided into several groups withsimilar credit risk characteristics and collectively calculated the expected credit loss. Thedetermination basis of groups is as following:
Determination basis of notes receivable is as following:
Group 1: Commercial acceptance billsGroup 2: Bank acceptance billsFor each group, the Company calculates expected credit losses through default exposureand the lifetime expected credit losses rate, taking reference to historical experience forcredit losses and considering current condition and expectation for the future economic
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situation.Determination basis of accounts receivable is as following:
Group 1: Accounts receivables due from the company within the scope of consolidationGroup 2: Accounts receivables due from other customersFor each group, the Company calculates expected credit losses through preparing an aginganalysis schedule with the lifetime expected credit losses rate, taking reference to historicalexperience for credit losses and considering current condition and expectation for the futureeconomic situation.Determination basis of other receivables is as following:
Group 1: Other receivables due from the company within the scope of consolidationGroup 2: Other receivables due from othersFor each group, the Company calculates expected credit losses through default exposureand the 12-months or lifetime expected credit losses rate, taking reference to historicalexperience for credit losses and considering current condition and expectation for the futureeconomic situation.Debt investment and other debt investmentFor debt investment and other debt investment, the Company shall calculate the expectedcredit loss through the default exposure and the 12-month or lifetime expected credit lossrate based on the nature of the investment, counterparty and the type of risk exposure.(ii) Low credit riskIf the financial instrument has a low risk of default, the borrower has a strong capacity tomeet its contractual cash flow obligations in the near term and adverse changes ineconomic and business conditions in the longer term may, but will not necessarily, reducethe ability of the borrower to fulfill its contractual cash flow obligations.(iii) Significant increase in credit riskThe Company shall assess whether the credit risk on a financial instrument has increasedsignificantly since initial recognition, using the change in the risk of a default occurring overthe expected life of the financial instrument, through the comparison of the risk of a defaultoccurring on the financial instrument as at the reporting date with the risk of a defaultoccurring on the financial instrument as at the date of initial recognition.
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To make that assessment, the Company shall consider reasonable and supportableinformation, that is available without undue cost or effort, and that is indicative of significantincreases in credit risk since initial recognition, including forward-looking information. Theinformation considered by the Company are as following:
? Significant changes in internal price indicators of credit risk as a result of a changein credit risk since inception? Existing or forecast adverse change in the business, financial or economicconditions of the borrower that results in a significant change in the borrower’s ability tomeet its debt obligations；? An actual or expected significant change in the operating results of the borrower;An actual or expected significant adverse change in the regulatory, economic, ortechnological environment of the borrower；? Significant changes in the value of the collateral supporting the obligation or in thequality of third-party guarantees or credit enhancements, which are expected to reduce theborrower’s economic incentive to make scheduled contractual payments or to otherwisehave an effect on the probability of a default occurring;
? Significant change that are expected to reduce the borrower’s economic incentiveto make scheduled contractual payments;
? Expected changes in the loan documentation including an expected breach ofcontract that may lead to covenant waivers or amendments, interest payment holidays,interest rate step-ups, requiring additional collateral or guarantees, or other changes to thecontractual framework of the instrument；
? Significant changes in the expected performance and behaviour of the borrower；
? Contractual payments are more than 30 days past due.Depending on the nature of the financial instruments, the Company shall assess whetherthe credit risk has increased significantly since initial recognition on an individual financialinstrument or a group of financial instruments. When assessed based on a group offinancial instruments, the Company can group financial instruments on the basis of sharedcredit risk characteristics, for example, past due information and credit risk rating.Generally, the Company shall determine the credit risk on a financial asset has increased
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significantly since initial recognition when contractual payments are more than 30 days pastdue. The Company can only rebut this presumption if the Company has reasonable andsupportable information that is available without undue cost or effort, that demonstrates thatthe credit risk has not increased significantly since initial recognition even though thecontractual payments are more than 30 days past due.(iv) Credit-impaired financial assetThe Company shall assess at each reporting date whether the credit impairment hasoccurred for financial asset at amortised cost and debt investment at fair value throughother comprehensive income. A financial asset is credit-impaired when one or more eventsthat have a detrimental impact on the estimated future cash flows of that financial assethave occurred. Evidences that a financial asset is credit-impaired include observable dataabout the following events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as adefault or past due event; the lender(s) of the borrower, for economic or contractual reasonsrelating to the borrower’s financial difficulty, having granted to the borrower a concession(s)that the lender(s) would not otherwise consider；it is becoming probable that the borrowerwill enter bankruptcy or other financial reorganisation；the disappearance of an activemarket for that financial asset because of financial difficulties；the purchase or origination ofa financial asset at a deep discount that reflects the incurred credit losses.(v) Presentation of impairment of expected credit lossIn order to reflect the changes of credit risk of financial instrument since initial recognition,the Company shall at each reporting date remeasure the expected credit loss andrecognise in profit or loss, as an impairment gain or loss, the amount of expected creditlosses addition (or reversal). For financial asset at amortised cost, the loss allowance shallreduce the carrying amount of the financial asset in the statement of financial position; fordebt investment at fair value through other comprehensive income, the loss allowance shallbe recognised in other comprehensive income and shall not reduce the carrying amount ofthe financial asset in the statement of financial position.(vi) Write-offThe Company shall directly reduce the gross carrying amount of a financial asset when theCompany has no reasonable expectations of recovering the contractual cash flow of afinancial asset in its entirety or a portion thereof. Such write-off constitutes a derecognition
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of the financial asset. This circumstance usually occurs when the Company determines thatthe debtor has no assets or sources of income that could generate sufficient cash flow torepay the write-off amount.Recovery of financial asset written off shall be recognised in profit or loss as reversal ofimpairment loss.(f) Transfer of financial assetsTransfer of financial assets refers to following two situations:
? Transfers the contractual rights to receive the cash flows of the financial asset;? Transfers the entire or a part of a financial asset and retains the contractual rights toreceive the cash flows of the financial asset, but assumes a contractual obligation to paythe cash flows to one or more recipients.(i) Derecognition of transferred assetsIf the Company transfers substantially all the risks and rewards of ownership of the financialasset, or neither transfers nor retains substantially all the risks and rewards of ownership ofthe financial asset but has not retained control of the financial asset, the financial asset shallbe derecognised.Whether the Company has retained control of the transferred asset depends on thetransferee’s ability to sell the asset. If the transferee has the practical ability to sell the assetin its entirety to an unrelated third party and is able to exercise that ability unilaterally andwithout needing to impose additional restrictions on the transfer, the Company has notretained control.The Company judges whether the transfer of financial asset qualifies for derecognitionbased on the substance of the transfer.If the transfer of financial asset qualifies for derecognition in its entirety, the differencebetween the following shall be recognised in profit or loss:
? The carrying amount of transferred financial asset;? The sum of consideration received and the part derecognised of the cumulativechanges in fair value previously recognised in other comprehensive income (The financialassets involved in the transfer are classified as financial assets at fair value through othercomprehensive income in accordance with Article 18 of the Accounting Standards for
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Business Enterprises No.22 - Recognition and Measurement of Financial Instruments).If the transferred asset is a part of a larger financial asset and the part transferred qualifiesfor derecognition, the previous carrying amount of the larger financial asset shall beallocated between the part that continues to be recognised (For this purpose, a retainedservicing asset shall be treated as a part that continues to be recognised) and the part thatis derecognised, based on the relative fair values of those parts on the date of the transfer.The difference between following two amounts shall be recognised in profit or loss:
? The carrying amount (measured at the date of derecognition) allocated to the partderecognised；? The sum of the consideration received for the part derecognised and part derecognisedof the cumulative changes in fair value previously recognised in other comprehensiveincome (The financial assets involved in the transfer are classified as financial assets at fairvalue through other comprehensive income in accordance with Article 18 of the AccountingStandards for Business Enterprises No.22 - Recognition and Measurement of FinancialInstruments).(ii) Continuing involvement in transferred assetsIf the Company neither transfers nor retains substantially all the risks and rewards ofownership of a transferred asset, and retains control of the transferred asset, the Companyshall continue to recognise the transferred asset to the extent of its continuing involvementand also recognise an associated liability.The extent of the Company’s continuing involvement in the transferred asset is the extent towhich it is exposed to changes in the value of the transferred asset(iii) Continue to recognise the transferred assetsIf the Company retains substantially all the risks and rewards of ownership of thetransferred financial asset, the Company shall continue to recognise the transferred assetin its entirety and the consideration received shall be recognised as a financial liability.The financial asset and the associated financial liability shall not be offset. In subsequentaccounting period, the Company shall continuously recognise any income (gain) arisingfrom the transferred asset and any expense (loss) incurred on the associated liability.(g) Offsetting financial assets and financial liabilitiesFinancial assets and financial liabilities shall be presented separately in the statement of
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financial position and shall not be offset. When meets the following conditions, financialassets and financial liabilities shall be offset and the net amount presented in the statementof financial position:
The Company currently has a legally enforceable right to set off the recognised amounts;The Company intends either to settle on a net basis, or to realise the asset and settle theliability simultaneously.In accounting for a transfer of a financial asset that does not qualify for derecognition, theCompany shall not offset the transferred asset and the associated liability.(h) Determination of fair value of financial instrumentsDetermination of financial assets and financial liabilities please refer to Note 3.11
3.11 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date.The Company determines fair value of the related assets and liabilities based on marketvalue in the principal market, or in the absence of a principal market, in the mostadvantageous market price for the related asset or liability. The fair value of an asset or aliability is measured using the assumptions that market participants would use when pricingthe asset or liability, assuming that market participants act in their economic best interest.The principal market is the market in which transactions for an asset or liability take placewith the greatest volume and frequency. The most advantageous market is the marketwhich maximizes the value that could be received from selling the asset and minimizes thevalue which is needed to be paid in order to transfer a liability, considering the effect oftransport costs and transaction costs both.If the active market of the financial asset or financial liability exists, the Company shallmeasure the fair value using the quoted price in the active market. If the active market ofthe financial instrument is not available, the Company shall measure the fair value usingvaluation techniques.A fair value measurement of a non-financial asset takes into account a market participant’sability to generate economic benefits by using the asset in its highest and best use or byselling it to another market participant that would use the asset in its highest and best use.? Valuation techniques
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The Company uses valuation techniques that are appropriate in the circumstances and forwhich sufficient data are available to measure fair value, including the market approach, theincome approach and the cost approach. The Company shall use valuation techniquesconsistent with one or more of those approaches to measure fair value. If multiple valuationtechniques are used to measure fair value, the results shall be evaluated considering thereasonableness of the range of values indicated by those results. A fair value measurementis the point within that range that is most representative of fair value in the circumstances.When using the valuation technique, the Company shall give the priority to relevantobservable inputs. The unobservable inputs can only be used when relevant observableinputs is not available or practically would not be obtained. Observable inputs refer to theinformation which is available from market and reflects the assumptions that marketparticipants would use when pricing the asset or liability. Unobservable Inputs refer to theinformation which is not available from market and it has to be developed using the bestinformation available in the circumstances from the assumptions that market participantswould use when pricing the asset or liability.? Fair value hierarchyTo Company establishes a fair value hierarchy that categorises into three levels the inputsto valuation techniques used to measure fair value. The fair value hierarchy gives thehighest priority to Level 1 inputs and second to the Level 2 inputs and the lowest priority toLevel 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identicalassets or liabilities that the entity can access at the measurement date. Level 2 inputs areinputs other than quoted prices included within Level 1 that are observable for the asset orliability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset orliability.
3.12 Inventories
(a) Classification of inventoriesInventories are finished goods or products held for sale in the ordinary course of business,in the process of production for such sale, or in the form of materials or supplies to beconsumed in the production process or in the rendering of services, including raw materials,work in progress, semi-finished goods, finished goods, goods in stock, turnover material,etc.(b) Measurement method of cost of inventories sold or used
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Inventories are initially measured at the actual cost. Cost of inventories includes purchasecost, processing cost, and other costs. Cost of the issue is measured using the weightedaverage method.(c) Inventory systemThe perpetual inventory system is adopted. The inventories should be counted at leastonce a year, and surplus or losses of inventory stocktaking shall be included in currentprofit and loss.(d) Provision for impairment of inventoryInventories are stated at the lower of cost and net realizable value. The excess of cost overnet realizable value of the inventories is recognised as provision for impairment of inventory,and recognised in current profit or loss.Net realizable value of the inventory should be determined on the basis of reliable evidenceobtained, and factors such as purpose of holding the inventory and impact of post balancesheet event shall be considered.(i) In normal operation process, finished goods, products and materials for direct sale, theirnet realizable values are determined at estimated selling prices less estimated sellingexpenses and relevant taxes and surcharges; for inventories held to execute sales contractor service contract, their net realizable values are calculated on the basis of contract price.If the quantities of inventories specified in sales contracts are less than the quantities heldby the Company, the net realizable value of the excess portion of inventories shall bebased on general selling prices. Net realizable value of materials held for sale shall bemeasured based on market price.(ii) For materials in stock need to be processed, in the ordinary course of production andbusiness, net realisable value is determined at the estimated selling price less theestimated costs of completion, the estimated selling expenses and relevant taxes. If the netrealisable value of the finished products produced by such materials is higher than the cost,the materials shall be measured at cost; if a decline in the price of materials indicates thatthe cost of the finished products exceeds its net realisable value, the materials aremeasured at net realisable value and differences shall be recognised at the provision forimpairment.(iii) Provisions for inventory impairment are generally determined on an individual basis. Forinventories with large quantity and low unit price, the provisions for inventory impairment
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are determined on a category basis.(iv) If any factor rendering write-downs of the inventories has been eliminated at thereporting date, the amounts written down are recovered and reversed to the extent of theinventory impairment, which has been provided for. The reversal shall be included in profitor loss.(e) Amortisation method of low-value consumablesLow-value consumables: One-off writing off method is adoptedPackage material: One-off writing off method is adopted
3.13 Contract assets and contract liabilities
Effective from 1 January 2020Contract assets and contract liabilities are reocgnised on the basis of fulfilment ofperformance obligations and payment received from clients. A right to receive a promisedconsideration from a client resulting from goods transferred to or services provided to theclient (where the right to consideration is dependent on factors other than the passage oftime) is reocgnised a contract asset. A payment received from a client for which goods shallbe transferred to or services shall be provided to the client is recognised as a contractliability.See Note 3.10 for the determination method and accounting treatment method ofimpairment of contract assets.Contract assets and contract liabilities are presentd as line items on the statement offinancial position. A contract asset and contract liability arising from one contract arepresented in net; while the net amount is a debit balance, it is presented in contract assetsor other non-current assets depending on liquidity; while the net amount is a credit balance,it is presented in contract liabilities or other non-current liabilities depending on liquidity.Contract assets and contract liabilities arising form different contracts are not be offset.
3.14 Contract costs
Effective at 1 January 2020Costs for a contract include costs to fulfill the contract and costs to obtain the contract.An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all ofthe following criteria:
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I. the costs are directly associated with a contract or an anticipated contract, explicitlychargeable to the client under the contract, incurred only for the contract;II. the costs generate or enhance resouces of the Company that will be used insatisfying performance obligations in the future; andIII. the costs are expected to be recovered.An asset is recognised for the costs incurred to obtained a contract with a client if thosecosts are expected to be recovered.An asset recognised for the costs of a contract are amortised on a systematic basis that isconsistent with recognition of revenue arising from the contract. Where the costs incurred toobtain a contract would be amortised for a period less than one year should they berecognised as an asset, the costs are recognised in the current profit or loss as incurred.An impairment is recognised for an asset recognised for the costs of a contract to the extentthat the carrying amount of the asset exceeds:
I. the remaining amount of consideration that is expected to be received in exchange forthe goods or services to which the asset relates; lessII. the costs that relate directly to providing those goods or services and that have notbeen recognised as expenses.Upon recognition of the impairment, further consideration is given for provision for anonerous contract, in necessary.A reversal of some or all of an impairment loss previously recognised for an asset for thecosts of a contract when the impairment conditions no longer exist or have improved. Theincreased carrying amount of the asset is cappted by the amount that would have beendetermined (net of amortisation) if no impairment loss had been recognised previously.An asset recognised for the costs to fulfill a contract is presented in inventories if itsamortisation is not longer than 1 year or an operating cycle upon initial recognition;otherwise, it is presented in other non-current assets.An asset recognised for the costs to obtain a contract is presented in other current assets ifits amortisation is not longer than 1 year or an operating cycle upon initial recognition;otherwise, it is presented in other non-current assets.
3.15 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of,
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or significant influence over, an investee, as well as equity investments in joint ventures.Associates of the Company are those entities over which the Company has significantinfluence.(a) Determination basis of joint control or significant influence over the investeeJoint control is the relevant agreed sharing of control over an arrangement, and thearranged relevant activity must be decided under unanimous consent of the parties sharingcontrol. In assessing whether the Company has joint control of an arrangement, theCompany shall assess first whether all the parties, or a group of the parties, control thearrangement. When all the parties, or a group of the parties, considered collectively, areable to direct the activities of the arrangement, the parties control the arrangementcollectively. Then the Company shall assess whether decisions about the relevant activitiesrequire the unanimous consent of the parties that collectively control the arrangement. Iftwo or more groups of the parties could control the arrangement collectively, it shall not beassessed as have joint control of the arrangement. When assessing the joint control, theprotective rights are not considered.Significant influence is the power to participate in the financial and operating policydecisions of the investee but is not control or joint control of those policies. In determinationof significant influence over an investee, the Company should consider not only the existingvoting rights directly or indirectly held but also the effect of potential voting rights held by theCompany and other entities that could be currently exercised or converted, including theeffect of share warrants, share options and convertible corporate bonds that issued by theinvestee and could be converted in current period.If the Company holds, directly or indirectly 20% or more but less than 50% of the votingpower of the investee, it is presumed that the Company has significant influence of theinvestee, unless it can be clearly demonstrated that in such circumstance, the Companycannot participate in the decision-making in the production and operating of the investee.(b) Determination of initial investment cost(i) Long-term equity investments generated in business combinationsFor a business combination involving enterprises under common control, if the Companymakes payment in cash, transfers non-cash assets or bears liabilities as the considerationfor the business combination, the share of carrying amount of the owners’ equity of theacquiree in the consolidated financial statements of the ultimate controlling party is
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recognised as the initial cost of the long-term equity investment on the combination date.The difference between the initial investment cost and the carrying amount of cash paid,non-cash assets transferred and liabilities assumed shall be adjusted against the capitalreserve; if capital reserve is not enough to be offset, undistributed profit shall be offset inturn.For a business combination involving enterprises under common control, if the Companyissues equity securities as the consideration for the business combination, the share ofcarrying amount of the owners’ equity of the acquiree in the consolidated financialstatements of the ultimate controlling party is recognised as the initial cost of the long-termequity investment on the combination date. The total par value of the shares issued isrecognised as the share capital. The difference between the initial investment cost and thecarrying amount of the total par value of the shares issued shall be adjusted against thecapital reserve; if capital reserve is not enough to be offset, undistributed profit shall beoffset in turn.For business combination not under common control, the assets paid, liabilities incurred orassumed and the fair value of equity securities issued to obtain the control of the acquireeat the acquisition date shall be determined as the cost of the business combination andrecognised as the initial cost of the long-term equity investment. The audit, legal, valuationand advisory fees, other intermediary fees, and other relevant general administrative costsincurred for the business combination, shall be recognised in profit or loss as incurred.(ii) Long-term equity investments acquired not through the business combination, theinvestment cost shall be determined based on the following requirements:
For long-term equity investments acquired by payments in cash, the initial cost is theactually paid purchase cost, including the expenses, taxes and other necessaryexpenditures directly related to the acquisition of long-term equity investments.For long-term equity investments acquired through issuance of equity securities, the initialcost is the fair value of the issued equity securities.For the long-term equity investments obtained through exchange of non-monetary assets, ifthe exchange has commercial substance, and the fair values of assets traded out andtraded in can be measured reliably, the initial cost of long-term equity investment traded inwith non-monetary assets are determined based on the fair values of the assets traded outtogether with relevant taxes. Difference between fair value and book value of the assets
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traded out is recorded in current profit or loss. If the exchange of non-monetary assets doesnot meet the above criterion, the book value of the assets traded out and relevant taxes arerecognised as the initial investment cost.For long-term equity investment acquired through debt restructuring, the initial cost isdetermined based on the fair value of the equity obtained and the difference between initialinvestment cost and carrying amount of debts shall be recorded in current profit or loss.(c) Subsequent measurement and recognition of profit or lossLong-term equity investment to an entity over which the Company has ability of control shallbe accounted for at cost method. Long-term equity investment to a joint venture or anassociate shall be accounted for at equity method.(i) Cost methodFor Long-term equity investment at cost method, cost of the long-term equity investmentshall be adjusted when additional amount is invested or a part of it is withdrawn. TheCompany recognises its share of cash dividends or profits which have been declared todistribute by the investee as current investment income.(ii) Equity methodIf the initial cost of the investment is in excess of the share of the fair value of the netidentifiable assets in the investee at the date of investment, the difference shall not beadjusted to the initial cost of long-term equity investment; if the initial cost of the investmentis in short of the share of the fair value of the net identifiable assets in the investee at thedate investment, the difference shall be included in the current profit or loss and the initialcost of the long-term equity investment shall be adjusted accordingly.The Company recognises the share of the investee’s net profits or losses, as well as itsshare of the investee’s other comprehensive income, as investment income or losses andother comprehensive income respectively, and adjusts the carrying amount of theinvestment accordingly. The carrying amount of the investment shall be reduced by theshare of any profit or cash dividends declared to distribute by the investee. The investor’sshare of the investee’s owners’ equity changes, other than those arising from the investee’snet profit or loss, other comprehensive income or profit distribution, shall be recognised inthe investor’s equity, and the carrying amount of the long-term equity investment shall beadjusted accordingly. The Company recognises its share of the investee’s net profits orlosses after making appropriate adjustments of investee’s net profit based on the fair
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values of the investee’s identifiable net assets at the investment date. If the accountingpolicy and accounting period adopted by the investee is not in consistency with theCompany, the financial statements of the investee shall be adjusted according to theCompany’s accounting policies and accounting period, based on which, investment incomeor loss and other comprehensive income, etc., shall be adjusted. The unrealized profits orlosses resulting from inter-company transactions between the company and its associate orjoint venture are eliminated in proportion to the company’s equity interest in the investee,based on which investment income or losses shall be recognised. Any losses resulting frominter-company transactions between the investor and the investee, which belong to assetimpairment, shall be recognised in full.Where the Company obtains the power of joint control or significant influence, but notcontrol, over the investee, due to additional investment or other reason, the relevantlong-term equity investment shall be accounted for by using the equity method, initial costof which shall be the fair value of the original investment plus the additional investment.Where the original investment is classified as other equity instrument investment, differencebetween its fair value and the carrying value, in addition to the cumulative gain or losspreviously recorded in other comprehensive income, shall be transferred out of othercomprehensive income and recogised into retained earnings using equity method.If the Company loses the joint control or significant influence of the investee for somereasons such as disposal of equity investment, the retained interest shall be measured atfair value and the difference between the carrying amount and the fair value at the date ofloss the joint control or significant influence shall be recognised in profit or loss. When theCompany discontinues the use of the equity method, the Company shall account for allamounts previously recognised in other comprehensive income under equity method inrelation to that investment on the same basis as would have been required if the investeehad directly disposed of the related assets or liabilities.(d) Equity investment classified as held for saleAny retained interest in the equity investment not classified as held for sale, shall beaccounted for using equity method.When an equity investment in an associate or a joint venture previously classified as heldfor sale no longer meets the criteria to be so classified, it shall be accounted for using theequity method retrospectively as from the date of its classification as held for sale. Financialstatements for the periods since classification as held for sale shall be amended
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accordingly.(e) Impairment testing and provision for impairment lossFor investment in subsidiaries, associates or a joint venture, provision for impairment lossplease refer to Note 3.21.
3.16 Investment Properties
(a) Classification of investment propertiesInvestment properties are properties to earn rentals or for capital appreciation or both,including:
(i)Land use right leased out(ii)Land held for transfer upon appreciation(iii)Buildings leased out(b) The measurement model of investment propertyThe Company adopts the cost model for subsequent measurement of investmentproperties. For provision for impairment please refer to Note 3.20.The Company calculates the depreciation or amortization based on the net amount ofinvestment property cost less the accumulated impairment and the net residual value usingstraight-line method.
3.17 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose ofproducing commodities, rendering services, renting or business management with usefullives exceeding one year.(a) Recognition criteria of fixed assetsFixed assets will only be recognised at the actual cost paid when obtaining as all thefollowing criteria are satisfied:
(i) It is probable that the economic benefits relating to the fixed assets will flow into theCompany;(ii) The costs of the fixed assets can be measured reliably.Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if
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recognition criteria of fixed assets are satisfied, otherwise the expenditure shall be recordedin current profit or loss when incurred.(b) Depreciation methods of fixed assetsThe Company begins to depreciate the fixed asset from the next month after it is availablefor intended use using the straight-line-method. The estimated useful life and annualdepreciation rates which are determined according to the categories, estimated economicuseful lives and estimated net residual rates of fixed assets are listed as followings:
| Category | Depreciation method | Estimated useful life (year) | Residual rates (%) | Annual depreciation rates (%) |
| Buildings and constructions | straight-line-method | 8.00-35.00 | 3.00-5.00 | 2.70-12.10 |
| Machinery equipment | straight-line-method | 5.00-10.00 | 3.00-5.00 | 9.50-19.40 |
| Vehicles | straight-line-method | 4.00 | 3.00 | 24.25 |
| Office equipment and others | straight-line-method | 3.00 | 3.00 | 32.33 |
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will be transferred to the lessee by the end of the lease term, they shall be depreciated overtheir remaining useful lives; otherwise, the leased assets shall be depreciated over theshorter of the lease terms or their remaining useful lives.
3.18 Construction in Progress
(a) Classification of construction in progressConstruction in progress is measured on an individual project basis.(b) Recognition criteria and timing of transfer from construction in progress to fixedassetsThe initial book values of the fixed assets are stated at total expenditures incurred beforethey are ready for their intended use, including construction costs, original price ofmachinery equipment, other necessary expenses incurred to bring the construction inprogress to get ready for its intended use and borrowing costs of the specific loan for theconstruction or the proportion of the general loan used for the constructions incurred beforethey are ready for their intended use. The construction in progress shall be transferred tofixed asset when the installation or construction is ready for the intended use. Forconstruction in progress that has been ready for their intended use but relevant budgets forthe completion of projects have not been completed, the estimated values of projectbudgets, prices, or actual costs should be included in the costs of relevant fixed assets, anddepreciation should be provided according to relevant policies of the Company when thefixed assets are ready for intended use. After the completion of budgets needed for thecompletion of projects, the estimated values should be substituted by actual costs, butdepreciation already provided is not adjusted.
3.19 Borrowing Costs
(a) Recognition criteria and period for capitalization of borrowing costsThe Company shall capitalize the borrowing costs that are directly attributable to theacquisition, construction or production of qualifying assets when meet the followingconditions:
(i) Expenditures for the asset are being incurred;(ii) Borrowing costs are being incurred, and;(iii) Acquisition, construction or production activities that are necessary to prepare the
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assets for their intended use or sale are in progress.Other borrowing cost, discounts or premiums on borrowings and exchange differences onforeign currency borrowings shall be recognized into current profit or loss when incurred.Capitalization of borrowing costs is suspended during periods in which the acquisition,construction or production of a qualifying asset is interrupted abnormally and theinterruption is for a continuous period of more than 3 months.Capitalization of such borrowing costs ceases when the qualifying assets being acquired,constructed or produced become ready for their intended use or sale. The expenditureincurred subsequently shall be recognised as expenses when incurred.(b) Capitalization rate and measurement of capitalized amounts of borrowing costsWhen funds are borrowed specifically for purchase, construction or manufacturing of assetseligible for capitalization, the Company shall determine the amount of borrowing costseligible for capitalisation as the actual borrowing costs incurred on that borrowing during theperiod less any interest income on bank deposit or investment income on the temporaryinvestment of those borrowings.Where funds allocated for purchase, construction or manufacturing of assets eligible forcapitalization are part of a general borrowing, the eligible amounts are determined by theweighted-average of the cumulative capital expenditures in excess of the specificborrowing multiplied by the general borrowing capitalization rate. The capitalization rate willbe the weighted average of the borrowing costs applicable to the general borrowing.
3.20 Intangible Assets
(a) Measurement method of intangible assetsIntangible assets are recognised at actual cost at acquisition.(b) The useful life and amortisation of intangible assets(i) The estimated useful lives of the intangible assets with finite useful lives are as follows:
| Category | Estimated useful life | Basis |
| Land use right | 50 years | Legal life |
| Patent right | 10 years | The service life is determined by reference to the period that can bring |
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| economic benefits to the Company | ||
| Software | 3-5 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
| Trademark | 10 years | The service life is determined by reference to the period that can bring economic benefits to the Company |
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within the estimated useful lives.(c) Criteria of classifying expenditures on internal research and developmentprojects into research phase and development phasePreparation activities related to materials and other relevant aspects undertaken by theCompany for the purpose of further development shall be treated as research phase.Expenditures incurred during the research phase of internal research and developmentprojects shall be recognised in profit or loss when incurred.Development activities after the research phase of the Company shall be treated asdevelopment phase.(d) Criteria for capitalization of qualifying expenditures during the developmentphaseExpenditures arising from development phase on internal research and developmentprojects shall be recognised as intangible assets only if all of the following conditions havebeen met:
(i) Technical feasibility of completing the intangible assets so that they will be available foruse or sale;(ii) Its intention to complete the intangible asset and use or sell it;(iii) The method that the intangible assets generate economic benefits, including theCompany can demonstrate the existence of a market for the output of the intangible assetsor the intangible assets themselves or, if it is to be used internally, the usefulness of theintangible assets;(iv) The availability of adequate technical, financial and other resources to complete thedevelopment and to use or sell the intangible asset; and(v) Its ability to measure reliably the expenditure attributable to the intangible asset.
3.21 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and jointventures, investment properties, fixed assets and constructions in progress subsequentlymeasured at cost, intangible assets, shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is anyindication that an asset may be impaired. If any such indication exists, the Company shall
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estimate the recoverable amount of the asset and test for impairment. Irrespective ofwhether there is any indication of impairment, the Company shall test for impairment ofgoodwill acquired in a business combination, intangible assets with an indefinite useful lifeor intangible assets not yet available for use annually.The recoverable amounts of the long-term assets are the higher of their fair values lesscosts to dispose and the present values of the estimated future cash flows of the long-termassets. The Company estimate the recoverable amounts on an individual basis. If it isdifficult to estimate the recoverable amount of the individual asset, the Company estimatesthe recoverable amount of the groups of assets that the individual asset belongs to.Identification of an group of asset is based on whether the cash inflows from it are largelyindependent of the cash inflows from other assets or groups of assets.If, and only if, the recoverable amount of an asset or a group of assets is less than itscarrying amount, the carrying amount of the asset shall be reduced to its recoverableamount and the provision for impairment loss shall be recognised accordingly.For the purpose of impairment testing, goodwill acquired in a business combination shall,from the acquisition date, be allocated to relevant group of assets based on reasonablemethod; if it is difficult to allocate to relevant group of assets, good will shall be allocated torelevant combination of asset groups. The relevant group of assets or combination of assetgroups is a group of assets or combination of asset groups that is benefit from thesynergies of the business combination and is not larger than the reporting segmentdetermined by the Company.When test for impairment, if there is an indication that relevant group of assets orcombination of asset groups may be impaired, impairment testing for group of assets orcombination of asset groups excluding goodwill shall be conducted first, and calculate therecoverable amount and recognize the impairment loss. Then the group of assets orcombination of asset groups including goodwill shall be tested for impairment, bycomparing the carrying amount with its recoverable amount. If the recoverable amount isless than the carrying amount, the Company shall recognise the impairment loss.The mentioned impairment loss will not be reversed in subsequent accounting period onceit had been recognised.
3.22 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be
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amortised over current and subsequent periods with the amortisation period exceeding oneyear. Long-term deferred expenses are evenly amortised over the beneficial period
3.23 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by theCompany in exchange for service rendered by employees or for the termination ofemployment relationship. Employee benefits include short-term employee benefits,post-employment benefits, termination benefits and other long-term employee benefits.Benefits provided to an employee's spouse, children, dependents, family members ofdecreased employees, or other beneficiaries are also employee benefits.According to liquidity, employee benefits are presented in the statement of financial positionas “Employee benefits payable” and “Long-term employee benefits payable”.(a) Short-term employee benefits(i) Employee basic salary (salary, bonus, allowance, subsidy)The Company recognises, in the accounting period in which an employee provides service,actually occurred short-term employee benefits as a liability, with a corresponding charge tocurrent profit except for those recognised as capital expenditure based on the requirementof accounting standards.(ii) Employee welfareThe Company shall recognise the employee welfare based on actual amount whenincurred into current profit or loss or related capital expenditure. Employee welfare shall bemeasured at fair value as it is a non-monetary benefit.(iii) Social insurance such as medical insurance, work injury insurance and maternityinsurance, housing funds, labor union fund and employee education fundPayments made by the Company of social insurance for employees, such as medicalinsurance, work injury insurance and maternity insurance, payments of housing funds, andlabor union fund and employee education fund accrued in accordance with relevantrequirements, in the accounting period in which employees provide services, is calculatedaccording to required accrual bases and accrual ratio in determining the amount ofemployee benefits and the related liabilities, which shall be recognised in current profit orloss or the cost of relevant asset.
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(iv) Short-term paid absencesThe company shall recognise the related employee benefits arising from accumulating paidabsences when the employees render service that increases their entitlement to future paidabsences. The additional payable amounts shall be measured at the expected additionalpayments as a result of the unused entitlement that has accumulated. The Company shallrecognise relevant employee benefit of non-accumulating paid absences when theabsences actually occurred.(v)Short-term profit-sharing planThe Company shall recognise the related employee benefits payable under a profit-sharingplan when all of the following conditions are satisfied:
(i) The Company has a present legal or constructive obligation to make such payments as aresult of past events; and(ii) A reliable estimate of the amounts of employee benefits obligation arising from the profit-sharing plan can be made.(b) Post-employment benefits(i) Defined contribution plansThe Company shall recognise, in the accounting period in which an employee providesservice, the contribution payable to a defined contribution plan as a liability, with acorresponding charge to the current profit or loss or the cost of a relevant asset.When contributions to a defined contribution plan are not expected to be settled whollybefore twelve months after the end of the annual reporting period in which the employeesrender the related service, they shall be discounted using relevant discount rate (marketyields at the end of the reporting period on high quality corporate bonds in active market orgovernment bonds with the currency and term which shall be consistent with the currencyand estimated term of the defined contribution obligations) to measure employee benefitspayable.(ii) Defined benefit planThe present value of defined benefit obligation and current service costsBased on the expected accumulative welfare unit method, the Company shall makeestimates about demographic variables and financial variables in adopting the unbiased
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and consistent actuarial assumptions and measure defined benefit obligation, anddetermine the obligation period. The Company shall discount the obligation arising fromdefined benefit plan using relevant discount rate (market yields at the end of the reportingperiod on high quality corporate bonds in active market or government bonds with thecurrency and term which shall be consistent with the currency and estimated term of thedefined benefit obligations) in order to determine the present value of the defined benefitobligation and the current service cost.The net defined benefit liability or assetThe net defined benefit liability (asset) is the deficit or surplus recognised as the presentvalue of the defined benefit obligation less the fair value of plan assets (if any).When the Company has a surplus in a defined benefit plan, it shall measure the net definedbenefit asset at the lower of the surplus in the defined benefit plan and the asset ceiling.The amount recognised in the cost of asset or current profit or lossService cost comprises current service cost, past service cost and any gain or loss onsettlement. Other service cost shall be recognised in profit or loss unless accountingstandards require or allow the inclusion of current service cost within the cost of assets.Net interest on the net defined benefit liability (asset) comprising interest income on planassets, interest cost on the defined benefit obligation and interest on the effect of the assetceiling, shall be included in profit or loss.The amount recognised in other comprehensive incomeChanges in the net liability or asset of the defined benefit plan resulting from theremeasurements including:
? Actuarial gains and losses, the changes in the present value of the defined benefitobligation resulting from experience adjustments or the effects of changes in actuarialassumptions;? Return on plan assets, excluding amounts included in net interest on the net definedbenefit liability or asset;? Any change in the effect of the asset ceiling, excluding amounts included in net intereston the net defined benefit liability (asset).Remeasurements of the net defined benefit liability (asset) recognised in other
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comprehensive income shall not be reclassified to profit or loss in a subsequent period.However, the Company may transfer those amounts recognised in other comprehensiveincome within equity.(c) Termination benefitsThe Company providing termination benefits to employees shall recognise an employeebenefits liability for termination benefits, with a corresponding charge to the profit or loss ofthe reporting period, at the earlier of the following dates:
(i) When the Company cannot unilaterally withdraw the offer of termination benefitsbecause of an employment termination plan or a curtailment proposal.(ii) When the Company recognises costs or expenses related to a restructuring thatinvolves the payment of termination benefits.If the termination benefits are not expected to be settled wholly before twelve months afterthe end of the annual reporting period, the Company shall discount the termination benefitsusing relevant discount rate (market yields at the end of the reporting period on high qualitycorporate bonds in active market or government bonds with the currency and term whichshall be consistent with the currency and estimated term of the defined benefit obligations)to measure the employee benefits.(d) Other long-term employee benefits(i) Meet the conditions of the defined contribution planWhen other long-term employee benefits provided by the Company to the employeessatisfies the conditions for classifying as a defined contribution plan, all those benefitspayable shall be accounted for as employee benefits payable at their discounted value.(ii) Meet the conditions of the defined benefit planAt the end of the reporting period, the Company recognised the cost of employee benefitfrom other long-term employee benefits as the following components:
? Service costs;? Net interest cost for net liability or asset of other long-term employee benefits? Changes resulting from the remeasurements of the net liability or asset of otherlong-term employee benefits
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In order to simplify the accounting treatment, the net amount of above items shall berecognised in profit or loss or relevant cost of assets.
3.24 Estimated Liabilities
(a) Recognition criteria of estimated liabilitiesThe Company recognises the estimated liabilities when obligations related to contingenciessatisfy all the following conditions:
(i) That obligation is a current obligation of the Company;(ii) It is likely to cause any economic benefit to flow out of the Company as a result ofperformance of the obligation; and(iii) The amount of the obligation can be measured reliably.(b) Measurement method of estimated liabilitiesThe estimated liabilities of the Company are initially measured at the best estimate ofexpenses required for the performance of relevant present obligations. The Company,when determining the best estimate, has had a comprehensive consideration of risks withrespect to contingencies, uncertainties and the time value of money. The carrying amountof the estimated liabilities shall be reviewed at the end of every reporting period. Ifconclusive evidences indicate that the carrying amount fails to be the best estimate of theestimated liabilities, the carrying amount shall be adjusted based on the updated bestestimate.
3.25 Revenue recognition principle and measurement
Effective from 1 January 2020
3.25.1 General principle
Revenue is the total inflow of economic benefits formed in the company's daily activitiesthat will increase shareholders' equity and does not relate to the capital invested byshareholders.The Company has fulfilled the performance obligation in the contract, that is, the revenue isrecognised when the customer obtains the control right of relevant goods. To obtain thecontrol right of the relevant commodity means to be able to dominate the use of the
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commodity and obtain almost all the economic benefits from it.If there are two or more performance obligations in the contract, the Company will allocatethe transaction price to each performance obligation based on the relative proportion of theseparate selling price of the goods or services promised by each performance obligation onthe start date of the contract, and measure the income based on the transaction priceallocated to each single performance obligation.The transaction price refers to the amount of consideration that the Company is expected tobe entitled to receive due to the transfer of goods or services to customers, excludingpayments collected on behalf of third parties. When determining the transaction price of thecontract, the Company determines the transaction price according to the terms of thecontract and in combination with its historical practices. When determining the transactionprice, the Company takes into account the influence of variable considerations, significantfinancing elements in the contract, the non-cash considerations, the considerations payableto customers and other factors. The Company determines the transaction price includingvariable consideration at an amount that does not exceed the amount at which theaccumulated recognized income is unlikely to have a significant reversal when the relevantuncertainty is eliminated. If there is a significant financing component in the contract, theCompany will determine the transaction price based on the amount payable in cash whenthe customer obtains the control right of the commodity. The difference between thetransaction price and the contract consideration will be amortised by the effective interestmethod during the contract period. If the interval between the control right transfer and thecustomer's payment is less than one year, the company will not consider the financingcomponent.If one of the following conditions is met, the performance obligation shall be fulfilled within acertain period of time; otherwise, the performance obligation shall be fulfilled at a certainpoint of time:
(a) The customer obtains and consumes the economic benefits brought by theCompany's fulfillment of contract when the Company performs the obligations;(b) The customer can control the commodities under construction during the Company'sexecution of the contract;(c) The commodities produced by the Company during the performance of the contracthave irreplaceable uses, and the Company has the right to collect payment for the
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cumulative performance part that has been completed so far during the entire contractperiod.For performance obligations fulfilled within a certain period of time, the Companyrecognises revenue in accordance with the performance progress during that period,except where the performance progress cannot be reasonably determined. The Companydetermines the progress of the performance of services in accordance with the inputmethod (or output method). When the progress of the contract performance cannot bereasonably determined, if the cost incurred by the Company is expected to becompensated, the revenue shall be recognised according to the amount of the costincurred until the progress of the contract performance can be reasonably determined.For performance obligations fulfilled at a certain point in time, the Company recognisesrevenue at the point when the customer obtains control of the relevant commodities. TheCompany considers the following signs when judging whether a customer has obtainedcontrol of goods or services:
(a)The Company has the current right to receive payment for the goods or services, thatis, the customer has the current obligation to pay for the goods;(b) The Company has transferred the legal ownership of the goods to the customer, thatis, the customer has the legal ownership of the goods;(c) The Company has transferred the goods in kind to the customer, that is, the customerhas possessed the goods in kind;(d) The company has transferred the main risks and rewards of the ownership of thegoods to the customers, that is, the customers have obtained the main risks and rewardsof the ownership of the goods;(e) The customer has accepted the goods or services.(f) Other indications that the customer has obtained control of the product
3.25.2 Specific methods
The specific methods of the Company's revenue recognition are as follows:
(a) Revenue from sale of goodsRevenue from sale of goods shall be recognised when the following criteria are satisfied:
(i) Significant risks and rewards related to ownership of the goods have been transferred
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to the buyer;(ii) The Company retains neither continuous management rights associated withownership of the goods sold nor effective control over the goods sold;(iii) Relevant amount of revenue can be measured reliably;(iv) It is probable that the economic benefits associated with the transaction will flow intothe Company; and(v) Relevant amount of cost incurred or to be incurred can be measured reliably.Revenue arising from domestic sales of goods is recognized when goods are dispatchedand delivered to the buyer, when significant risks and rewards attached to the ownership ofthe goods sold are passed to the buyer, when neither continual involvement in the rightsnormally associated with the ownership of the goods sold nor effective control over thegoods controls are retained, when revenue arising from the goods sold is reliablymeasurable, when inflow of future economic benefits is probable, and when cost incurredor to be incurred associated with the goods sold is reliably measurable. Revenue arisingfrom non-domestic sales of goods is recognized when goods are loaded on board andwhen the export clearance with the custom is completed.(b) Revenue from rendering of servicesWhen the outcome of rendering of services can be estimated reliably at the balance sheetdate, revenue associated with the transaction is recognised using the percentage ofcompletion method. Percentage of completion is determined based on the measurement ofthe work completedThe outcome of rendering of services can be estimated reliably when all of the followingconditions are satisfied: i) the amount of revenue can be measured reliably; ii) it is probablethat the associated economic benefits will flow to the Company; iii) the percentage ofcompletion of the transaction can be measured reliably; iv) the costs incurred and to beincurred for the transaction can be measured reliably.The Company shall determine the total revenue from rendering of services based on thereceived or receivable price stipulated in the contract or agreement, unless the received orreceivable amount as stipulated in the contract or agreement is unfair. At the end of thereporting period, the Company shall recognise the revenue from rendering of the servicesin current period, based on the amount of multiplying the total amount of revenues from
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rendering of the services by the percentage of completion then deducting the accumulativerevenues from rendering of the services that have been recognised in the previousaccounting periods. At the same time, the Company shall recognise the current costincurred for rendering of the services based on the amount of multiplying the total estimatedcost for rendering of the services by the percentage of completion and then deducting theaccumulative costs from rendering of the services that have been recognised in theprevious accounting periods.If the outcome of rendering of services cannot be estimated reliably at the balance sheetdate, the accounting treatment shall be based on the following circumstances, respectively:
(i) When the costs incurred are expected to be recovered, revenue shall be recognised tothe extent of costs incurred and charge an equivalent amount of cost to the profit and loss;(ii) When the costs incurred are not expected to be recovered, revenue shall not berecognised and the costs incurred are recognised into current profit or loss(c) Revenue from alienating the right to use assetsWhen it is probable that the economic benefits associated with the transaction will flow intothe Company and amount of revenue can be measured reliably, the Company shallrecognise the amount of revenue from the alienating of right to use assets based on thefollowing circumstances, respectively:
(i) Interest revenue should be calculated in accordance with the period for which theenterprise's cash is used by others and the effective interest rate; or(ii) The amount of royalty revenue should be calculated in accordance with the period andmethod of charging as stipulated in the relevant contract or agreement.
3.26 Government Grants
(a) Recognition of government grantsA government grant shall not be recgonised until there is reasonable assurance that:
(i) The Company will comply with the conditions attaching to them; and(ii) The grants will be received.(b) Measurement of government grantsMonetary grants from the government shall be measured at amount received or receivable,and non-monetary grants from the government shall be measured at their fair value or at a
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nominal value of CNY 1.00 when reliable fair value is not available.(c) Accounting for government grants(i) Government grants related to assetsGovernment grants pertinent to assets mean the government grants that are obtained bythe Company used for purchase or construction, or forming the long-term assets by otherways. Government grants pertinent to assets shall be recognised as deferred income, andshould be recognised in profit or loss on a systematic basis over the useful lives of therelevant assets. Grants measured at their nominal value shall be directly recognised inprofit or loss of the period when the grants are received. When the relevant assets are sold,transferred, written off or damaged before the assets are terminated, the remainingdeferred income shall be transferred into profit or loss of the period of disposing relevantassets.(ii) Government grants related to incomeGovernment grants other than related to assets are classified as government grants relatedto income. Government grants related to income are accounted for in accordance with thefollowing principles:
If the government grants related to income are used to compensate the enterprise’srelevant expenses or losses in future periods, such government grants shall be recognisedas deferred income and included into profit or loss in the same period as the relevantexpenses or losses are recognised;If the government grants related to income are used to compensate the enterprise’srelevant expenses or losses incurred, such government grants are directly recognised intocurrent profit or lossFor government grants comprised of part related to assets as well as part related to income,each part is accounted for separately; if it is difficult to identify different part, the governmentgrants are accounted for as government grants related to income as a whole.Government grants related to daily operation activities are recognised in other income inaccordance with the nature of the activities, and government grants irrelevant to dailyoperation activities are recognised in non-operating income.(iii) Loan interest subsidyWhen loan interest subsidy is allocated to the bank, and the bank provides a loan at
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lower-market rate of interest to the Company, the loan is recognised at the actual receivedamount, and the interest expense is calculated based on the principal of the loan and thelower-market rate of interest.When loan interest subsidy is directly allocated to the Company, the subsidy shall berecognised as offsetting the relevant borrowing cost.(iv) Repayment of the government grantsRepayment of the government grants shall be recorded by increasing the carrying amountof the asset if the book value of the asset has been written down, or reducing the balance ofrelevant deferred income if deferred income balance exists, any excess will be recognisedinto current profit or loss; or directly recognised into current profit or loss for othercircumstances.
3.27 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liabilityin the statement of financial position and its tax base at the balance sheet date. TheCompany recognise and measure the effect of taxable temporary differences anddeductible temporary differences on income tax as deferred tax liabilities or deferred taxassets using liability method. Deferred tax assets and deferred tax liabilities shall not bediscounted.(a) Recognition of deferred tax assetsDeferred tax assets should be recognised for deductible temporary differences, thecarryforward of unused tax losses and the carryforward of unused tax credits to the extentthat it is probable that taxable profit will be available against which the deductible temporarydifferences, the carryforward of unused tax losses and the carryforward of unused taxcredits can be utilised at the tax rates that are expected to apply to the period when theasset is realised, unless the deferred tax asset arises from the initial recognition of an assetor liability in a transaction that:
(i) Is not a business combination; and(ii) At the time of the transaction, affects neither accounting profit nor taxable profit (taxloss)The Company shall recognise a deferred tax asset for all deductible temporary differencesarising from investments in subsidiaries, associates and joint ventures, only to the extent
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that, it is probable that:
(i) The temporary difference will reverse in the foreseeable future; and(ii) Taxable profit will be available against which the deductible temporary difference can beutilised.At the end of each reporting period, if there is sufficient evidence that it is probable thattaxable profit will be available against which the deductible temporary difference can beutilized, the Company recognises a previously unrecognised deferred tax asset.The carrying amount of a deferred tax asset shall be reviewed at the end of each reportingperiod. The Company shall reduce the carrying amount of a deferred tax asset to the extentthat it is no longer probable that sufficient taxable profit will be available to allow the benefitof part or all of that deferred tax asset to be utilised. Any such reduction shall be reversed tothe extent that it becomes probable that sufficient taxable profit will be available.(b) Recognition of deferred tax liabilitiesA deferred tax liability shall be recognised for all taxable temporary differences at the taxrate that are expected to apply to the period when the liability is settled.(i) No deferred tax liability shall be recognised for taxable temporary differences arisingfrom:
? The initial recognition of goodwill; or? The initial recognition of an asset or liability in a transaction which: is not a businesscombination; and at the time of the transaction, affects neither accounting profit nor taxableprofit (tax loss)(ii) An entity shall recognise a deferred tax liability for all taxable temporary differencesassociated with investments in subsidiaries, associates, and joint ventures, except to theextent that both of the following conditions are satisfied:
? The Company is able to control the timing of the reversal of the temporary difference;and? It is probable that the temporary difference will not reverse in the foreseeable future.(c) Recognition of deferred tax liabilities or assets involved in special transactions orevents(i) Deferred tax liabilities or assets related to business combination
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For the taxable temporary difference or deductible temporary difference arising from abusiness combination not under common control, a deferred tax liability or a deferred taxasset shall be recognised, and simultaneously, goodwill recognised in the businesscombination shall be adjusted based on relevant deferred tax expense (income).(ii) Items directly recognised in equityCurrent tax and deferred tax related to items that are recognised directly in equity shall berecognised in equity. Such items include: other comprehensive income generated from fairvalue fluctuation of other equity investments; an adjustment to the opening balance ofretained earnings resulting from either a change in accounting policy that is appliedretrospectively or the correction of a prior period (significant) error; amounts arising oninitial recognition of the equity component of a compound financial instrument that containsboth liability and equity component.(iii) Unused tax losses and unused tax creditsUnsused tax losses and unused tax credits generated from daily operation of the CompanyitselfDeductible loss refers to the loss calculated and permitted according to the requirement oftax law that can be offset against taxable income in future periods. The criteria forrecognising deferred tax assets arising from the carryforward of unused tax losses and taxcredits are the same as the criteria for recognising deferred tax assets arising fromdeductible temporary differences. The Company recognises a deferred tax asset arisingfrom unused tax losses or tax credits only to the extent that there is convincing otherevidence that sufficient taxable profit will be available against which the unused tax lossesor unused tax credits can be utilised by the Company. Income taxes in current profit or lossshall be deducted as well.Unsused tax losses and unused tax credits arising from a business combinationUnder a business combination, the acquiree’s deductible temporary differences which donot satisfy the criteria at the acquisition date for recognition of deferred tax asset shall notbe recognised. Within 12 months after the acquisition date, if new information regarding thefacts and circumstances exists at the acquisition date and the economic benefit of theacquiree’s deductible temporary differences at the acquisition is expected to be realised,the Company shall recognise acquired deferred tax benefits and reduce the carryingamount of any goodwill related to this acquisition. If goodwill is reduced to zero, any
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remaining deferred tax benefits shall be recognised in profit or loss. All other acquireddeferred tax benefits realised shall be recognised in profit or loss.(iv) Temporary difference generated in consolidation eliminationWhen preparing consolidated financial statements, if temporary difference betweencarrying value of the assets and liabilities in the consolidated financial statements and theirtaxable bases is generated from elimination of inter-company unrealized profit or loss,deferred tax assets or deferred tax liabilities shall be recognised in the consolidatedfinancial statements, and income taxes expense in current profit or loss shall be adjustedas well except for deferred tax related to transactions or events recognised directly in equityand business combination.(v) Share-based payment settled by equityIf tax authority permits tax deduction that relates to share-based payment, during the periodin which the expenses are recognised according to the accounting standards, the Companyestimates the tax base in accordance with available information at the end of theaccounting period and the temporary difference arising from it. Deferred tax shall berecognised when criteria of recognition are satisfied. If the amount of estimated future taxdeduction exceeds the amount of the cumulative expenses related to share-based paymentrecognised according to the accounting standards, the tax effect of the excess amount shallbe recognised directly in equity.
3.28 Changes in Significant Accounting Policies and Accounting Estimates(a) Changes in accounting policesOn 5 July, 2017, Ministry of Finance announced the “Accounting Standards for BusinessEnterprises No. 14-Revenue (Revised in 2017)” (Caikuai [2017] No.22) (hereinafterreferred to as the "New Revenue Standards"), requiring the domestic listed companies toimplement the new revenue standards from 1 January 2020. The company implementedthe new revenue standard on 1 January 2020, and adjusted the relevant content of theaccounting policy. Please refer to Note 3.25 for details.The new revenue standards require that the cumulative impact of the first implementationof the standards shall be adjusted for the amount of retained earnings and other relateditems in the financial statements at the beginning of the first implementation year (1January 2020), and the information of the comparable period shall not be adjusted.
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On 10 December 2019, the Ministry of Finance issued the “Interpretation of AccountingStandards for Business Enterprises No. 13 principle”. The company implemented theinterpretation on 1 January 2020, and does not retrospectively adjust previous years.Due to the implementation of the new revenue standards, the Company's consolidatedfinancial statements correspondingly adjusted the contract liabilities of CNY468,905,320.12, advances from customers of CNY -529,863,011.73 and other currentliabilities of CNY 60,957,691.61. The impact of the relevant adjustments on the equityattributable to shareholders of the parent company of Company’s consolidated financialstatements is CNY 0.00, which the surplus reserve is CNY 0.00, and the retained earningsis CNY 0.00; the impact on non-controlling shareholders’ equity is CNY 0.00. The financialstatements of the parent company correspondingly adjusted the contract liabilities of CNY28,075.02, advances from customers of CNY -31,724.77 and other current liabilities of CNY3,649.75. The impact of the relevant adjustments on the shareholders’ equity of thefinancial statements of the parent company is CNY 0.00, which the surplus reserve is CNY
0.00, and the retained earnings is CNY 0.00; the impact on non-controlling shareholders’equity is CNY 0.00. The specific adjustments are as follows:
(b) Significant changes in accounting estimatesThe Company has no significant changes in accounting estimates for the reporting period.(c) Adjustments of the financial statements at the beginning of the reporting periodfor the first-year adoption of new revenue standards.Consolidated Financial Statements
Unit: Yuan Currency: CNY
| Items | 31 December 2019 | 1 January 2020 | Adjustment |
| Advances from customers | 529,863,011.73 | - | -529,863,011.73 |
| Contract liabilities | N/a. | 468,905,320.12 | 468,905,320.12 |
| Other current liabilities | 197,484,121.41 | 258,441,813.02 | 60,957,691.61 |
| Items | 31 December 2019 | 1 January 2020 | Adjustment |
| Advances from customers | 31,724.77 | - | -31,724.77 |
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| Items | 31 December 2019 | 1 January 2020 | Adjustment |
| Contract liabilities | N/a. | 28,075.02 | 28,075.02 |
| Other current liabilities | 11,953,800.20 | 11,957,449.95 | 3,649.75 |
| Categories of tax | Basis of tax assessment | Tax rate |
| Value added tax (VAT) | Output VATs are calculated and paid on taxable revenues at a tax rateof 13%（16%）or 10% or 6%, and VATs are paid at the net amounts after deducting input VATs for the reporting period | 13%、9%、6% |
| Consumption taxes | The consumption taxes are paid on the taxable sales | For the liquor sold, the ad valorem consumption tax shall be calculated and paid as CNY1.00 per kilogram or 1000ml, and the ad valorem consumption tax shall be calculated and paid as per 20% of the taxable sales |
| Urban maintenance and construction tax | Urban maintenance and construction taxes are paid on turnover taxes | 7%, 5% |
| Educational surcharge | Educational surcharges are paid on turnover taxes | 3% |
| Local educational surcharge | Local educational surcharges are paid on turnover taxes | 2% |
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| Enterprise income tax | Business taxes are calculated and paid on taxable revenues | 25% |
| Subsidiary | Tax rate |
| Anhui Longrui Glass Co., Ltd. | 15.00% |
| Anhui Ruisiweier Technology Co., Ltd. | 15.00% |
| Wuhan Yashibo tech. Co., Ltd. | 15.00% |
| Bozhou Gujing Waste Recycling Co., Ltd. | 5.00% |
| Bozhou Gujing hotel Co., Ltd | 5.00% |
| Anhui Zhenrui Construction Engineering Co., Ltd | 5.00% |
| Hubei Junlou Cultural Tourism Co., Ltd. | 5.00% |
| Hubei Yellow Crane Tower Beverage Co., Ltd. | 5.00% |
| Hubei Xinjia Testing Technology Co., Ltd. | 5.00% |
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According to Enterprise Income Tax Law and other relevant regulations, the company issubject to a national high-tech enterprise income tax rate at 15% for three years fromJanuary 1, 2019 to December 31, 2021.(iii) According to Response Letter for the Second Batch of High-tech Enterprises to be puton record in Hubei Province for 2018 (guokehuozi [2019] No.43) issued by Department ofScience and Technology of Hubei province, Department of Finance of Hubei province, andHubei Provincial Taxation Bureau of State Administration of Taxation, the subsidiaryYashibo was identified as a high-tech enterprise in 2018, therefore was given High-techEnterprise Certificate (Certificate Number:GR201842002339) which is valid for 3 years.According to Enterprise Income Tax Law and other relevant regulations, the company issubject to a national high-tech enterprise income tax rate at 15% for three years from 1January 2018 to 31 December 2020.(iv) According to Notice from Ministry of Finance and State Administration of Taxation onthe Implementation of Inclusive Tax Reduction Policy for Small and Micro Enterprises(Caishui [2019] No.13), from 1 January 2019 to 31 December 2021 the portion of theenterprise's annual taxable income which does not exceed CNY 1 million is reduced to 25%as taxable income, and income tax is paid at a tax rate of 20%. For the annual taxableincome of more than 1 million yuan but not more than CNY 3 million, this part is reduced to50% as taxable income, income tax is paid at the rate of 20%. The subsidiaries GujingHotel, Zhenrui Construction, Junlou Culture, Yellow Crane Tower Beverage, Jiaxin testingand waste company meet the condition of annual taxable income not exceeding CNY 1million while actual tax rate in 2020 was 5%.
5. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5.1 Cash and Cash Equivalents
| Items | 31 December 2020 | 31 December 2019 |
| Cash on hand | 178,127.77 | 292,465.36 |
| Cash in bank | 5,936,406,199.84 | 5,618,712,121.81 |
| Other monetary funds | 34,628,242.05 | 745,330.92 |
| Total | 5,971,212,569.66 | 5,619,749,918.09 |
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Note: At 31 December 2020, the structural deposits that cannot be withdrawn in advanceamounted to CNY 200 million, fixed deposits used to pledge and issue bank acceptancebills totaled CNY 100 million, and security deposit used to issue bank acceptance bills inother monetary funds totaled CNY 34,308,900.00. Except for that, no other monetary fundsare restricted to use or in some potential risks of recovery due to the mortgage, pledge orfreezing.
5.2 Held-for-trading financial assets
| Items | 31 December 2020 | 31 December 2019 |
| Financial Assets at Fair Value through Profit or Loss | 203,877,915.51 | 509,031,097.02 |
| Including: bank financial products | - | 297,146,591.78 |
| Fund investment | 203,877,915.51 | 211,884,505.24 |
| Total | 203,877,915.51 | 509,031,097.02 |
| Items | 31 December 2020 | 31 December 2019 | ||||
| Book Balance | Provision for bad debt | Carrying amount | Book Balance | Provision for bad debt | Carrying amount | |
| Bank acceptance bills | - | - | - | 1,002,758,533.39 | - | 1,002,758,533.39 |
| Commercial acceptance bills | - | - | - | 1,493,836.54 | 34,938.37 | 1,458,898.17 |
| Total | - | - | - | 1,004,252,369.93 | 34,938.37 | 1,004,217,431.56 |
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| Category | 31 December 2019 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognised collectively | 1,004,252,369.93 | 100.00 | 34,938.37 | 0.00 | 1,004,217,431.56 |
| Including: Group 1 | 1,493,836.54 | 0.15 | 34,938.37 | 2.34 | 1,458,898.17 |
| Group 2 | 1,002,758,533.39 | 99.85 | - | - | 1,002,758,533.39 |
| Total | 1,004,252,369.93 | 100.00 | 34,938.37 | 0.00 | 1,004,217,431.56 |
| Name | 31 December 2019 | ||
| Notes receivable | Provision for bad debt | Provision ratio (%) | |
| Within 1 year | 1,493,836.54 | 34,938.37 | 2.34 |
| Including:1-6months | 993,836.54 | 9,938.37 | 1.00 |
| 7-12months | 500,000.00 | 25,000.00 | 5.00 |
| Total | 1,493,836.54 | 34,938.37 | 2.34 |
| Category | 31 December | Changes during the reporting period | 31 December |
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| 2019 | Provision | Recovery or reversal | Write-off | 2020 | |
| Commercial acceptance bills | 34,938.37 | -34,938.37 | - | - | - |
| Total | 34,938.37 | -34,938.37 | - | - | - |
| Aging | 31 December 2020 | 31 December 2019 |
| Within one year | 64,157,166.51 | 41,004,875.62 |
| Including:1-6months | 61,367,773.81 | 37,333,246.24 |
| 7-12months | 2,789,392.70 | 3,671,629.38 |
| 1-2 years | 4,953,687.55 | 365,118.07 |
| 2-3 years | 142,796.00 | - |
| Over 3 years | - | 141,121.87 |
| Subtotal | 69,253,650.06 | 41,511,115.56 |
| Less: provision for bad debt | 1,319,914.15 | 734,547.60 |
| Total | 67,933,735.91 | 40,776,567.96 |
| Category | 31 December 2020 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognized collectively | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
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| Category | 31 December 2020 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Including: Group1 | - | - | - | - | - |
| Group2 | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
| Total | 69,253,650.06 | 100.00 | 1,319,914.15 | 1.91 | 67,933,735.91 |
| Category | 31 December 2019 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognized collectively | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
| Including: Group1 | - | - | - | - | - |
| Group2 | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
| Total | 41,511,115.56 | 100.00 | 734,547.60 | 1.77 | 40,776,567.96 |
| Aging | 31 December 2020 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Within one year | 64,157,166.51 | 753,147.38 | 1.17 |
| Including:1-6months | 61,367,773.81 | 613,677.74 | 1.00 |
| 7-12months | 2,789,392.70 | 139,469.64 | 5.00 |
| 1-2 years | 4,953,687.55 | 495,368.77 | 10.00 |
| 2-3 years | 142,796.00 | 71,398.00 | 50.00 |
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| Aging | 31 December 2020 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Over 3 years | - | - | - |
| Total | 69,253,650.06 | 1,319,914.15 | 1.91 |
| Aging | 31 December 2019 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Within one year | 41,004,875.62 | 556,913.92 | 1.36 |
| Including:1-6months | 37,333,246.24 | 373,332.45 | 1.00 |
| 7-12months | 3,671,629.38 | 183,581.47 | 5.00 |
| 1-2 years | 365,118.07 | 36,511.81 | 10.00 |
| 2-3 years | - | - | - |
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
| Total | 41,511,115.56 | 734,547.60 | 1.77 |
| Category | 31 December 2019 | Changes during the reporting period | 31 December 2020 | ||
| Provision | Recovery or reversal | Write-off | |||
| Accounts receivable with individually insignificant balance but provision for bad debt recognised individual | - | - | - | - | - |
| Group2: Provision for bad debt recognized collectively | 734,547.60 | 596,892.02 | - | 11,525.47 | 1,319,914.15 |
| Total | 734,547.60 | 596,892.02 | - | 11,525.47 | 1,319,914.15 |
~ 179 ~
| Entity name | Balance at 31 December 2020 | Proportion of the balance to the total accounts receivable (%) | Provision for bad debt |
| Customer 1 | 15,016,167.30 | 21.68 | 150,161.67 |
| Customer 2 | 13,520,689.99 | 19.52 | 171,731.58 |
| Customer 3 | 4,448,732.42 | 6.42 | 44,487.32 |
| Customer 4 | 3,385,474.86 | 4.89 | 33,854.75 |
| Customer 5 | 3,044,520.78 | 4.40 | 30,445.21 |
| Total | 39,415,585.35 | 56.91 | 430,680.53 |
| Category | 31 December 2020 | 31 December 2019 | ||||
| Book balance | Provision for bad debt | Carrying acount | Book balance | Provision for bad debt | Carrying acount | |
| Bank acceptance bills | 1,673,510,794.51 | - | 1,673,510,794.51 | - | - | - |
| Commercial acceptance bills | - | - | - | - | - | - |
| Total | 1,673,510,794.51 | - | 1,673,510,794.51 | - | - | - |
| Items | Pledged amount |
| Bank acceptance bills | 104,530,000.00 |
| Total | 104,530,000.00 |
| Items | Amount of derecognition | Amount of recognition |
~ 180 ~
| Items | Amount of derecognition | Amount of recognition |
| Bank acceptance bills | 943,175,713.16 | - |
| Total | 943,175,713.16 | - |
| Category | 31 December 2020 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognised collectively | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
| Including: Group 1 | - | - | - | - | - |
| Group 2 | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
| Total | 1,673,510,794.51 | 100.00 | - | - | 1,673,510,794.51 |
| Aging | 31 December 2020 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Within 1 year | - | - | - |
| Including:1-6months | - | - | - |
| 7-12months | - | - | - |
~ 181 ~
| Aging | 31 December 2020 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Total | - | - | - |
| Category | 31 December 2019 | Changes during the reporting period | 31 December 2020 | ||
| Provision | Recovery or reversal | Write-off | |||
| Commercial acceptance bills | - | - | - | - | - |
| Total | - | - | - | - | - |
| Aging | 31 December 2020 | 31 December 2019 | ||
| Amount | Proportion (%) | Amount | Proportion (%) | |
| Within one year | 55,069,897.85 | 99.09 | 196,781,962.46 | 99.66 |
| 1 to 2 years | 505,645.36 | 0.91 | 647,771.50 | 0.33 |
| 2 to 3 years | - | - | - | - |
| Over 3 years | - | - | 23,580.00 | 0.01 |
| Total | 55,575,543.21 | 100.00 | 197,453,313.96 | 100.00 |
~ 182 ~
| Entity name | Balance at 31 December 2020 | Proportion of the balance to the total advances to suppliers (%) |
| Supplier 1 | 21,839,825.79 | 39.30 |
| Supplier 2 | 6,184,531.04 | 11.13 |
| Supplier 3 | 4,511,430.66 | 8.12 |
| Supplier 4 | 2,317,352.16 | 4.17 |
| Supplier 5 | 1,752,019.97 | 3.15 |
| Total | 36,605,159.62 | 65.87 |
| Items | 31 December 2020 | 31 December 2019 |
| Interest receivable | - | 1,908,788.81 |
| Dividend receivable | - | - |
| Other receivables | 33,451,121.48 | 23,838,168.41 |
| Total | 33,451,121.48 | 25,746,957.22 |
| Items | 31 December 2020 | 31 December 2019 |
| Interest on large-denomination certificates of deposit | - | 1,908,788.81 |
| Less: Provision for bad debt | - | - |
| Total | - | 1,908,788.81 |
| Aging | 31 December 2020 | 31 December 2019 |
| Within one year | 31,014,800.18 | 21,391,891.49 |
~ 183 ~
| Aging | 31 December 2020 | 31 December 2019 |
| Including:1-6months | 29,186,461.60 | 16,704,667.12 |
| 7-12months | 1,828,338.58 | 4,687,224.37 |
| 1-2 years | 2,842,287.06 | 2,804,920.23 |
| 2-3 years | 523,089.00 | 646,513.23 |
| Over 3 years | 42,535,188.41 | 42,087,287.44 |
| Subtotal | 76,915,364.65 | 66,930,612.39 |
| Less: provision for bad debt | 43,464,243.17 | 43,092,443.98 |
| Total | 33,451,121.48 | 23,838,168.41 |
| Nature | 31 December 2020 | 31 December 2019 |
| Investment in securities | 40,807,394.41 | 40,850,949.35 |
| Deposit and guarantee | 5,266,477.91 | 5,343,741.34 |
| Borrowing for business trip expenses | 795,646.51 | 884,420.74 |
| Rent, utilities and gasoline charges | 8,962,876.17 | 8,479,446.65 |
| Others | 21,082,969.65 | 11,372,054.31 |
| Subtotal | 76,915,364.65 | 66,930,612.39 |
| Less: provision for bad debt | 43,464,243.17 | 43,092,443.98 |
| Total | 33,451,121.48 | 23,838,168.41 |
| Stages | Book balance | Provision for bad debt | Carrying acount |
| Stage 1 | 36,107,970.24 | 2,656,848.76 | 33,451,121.48 |
| Stage 2 | - | - | - |
| Stage 3 | 40,807,394.41 | 40,807,394.41 | - |
| Total | 76,915,364.65 | 43,464,243.17 | 33,451,121.48 |
~ 184 ~
A1. At 31 December 2020, provision for bad debt at stage 1:
| Category | Book balance | 12-month expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | - | - | - | - |
| Provision for bad debt recognised collectively | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
| Including: Group1 | - | - | - | - |
| Group2 | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
| Total | 36,107,970.24 | 7.36 | 2,656,848.76 | 33,451,121.48 |
| Aging | 31 December 2020 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Within one year | 31,014,800.18 | 383,281.55 | 1.24 |
| Including:1-6months | 29,186,461.60 | 291,864.62 | 1.00 |
| 7-12months | 1,828,338.58 | 91,416.93 | 5.00 |
| 1-2 years | 2,842,287.06 | 284,228.71 | 10.00 |
| 2-3 years | 523,089.00 | 261,544.50 | 50.00 |
| Over 3 years | 1,727,794.00 | 1,727,794.00 | 100.00 |
| Total | 36,107,970.24 | 2,656,848.76 | 7.36 |
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | 40,807,394.41 | 100.00 | 40,807,394.41 | - |
| Provision for bad debt recognised | - | - | - | - |
~ 185 ~
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| collectively | ||||
| Including: Group1 | - | - | - | - |
| Group2 | - | - | - | - |
| Total | 40,807,394.41 | 100.00 | 40,807,394.41 | - |
| Entity name | 31 December 2020 | |||
| Book balance | Provision for bad debt | Provision ratio (%) | Reason | |
| Hengxin Securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,807,394.41 | 40,807,394.41 | 100.00 | |
| Stages | Book balance | Provision for bad debt | Carrying acount |
| Stage 1 | 26,079,663.04 | 2,241,494.63 | 23,838,168.41 |
| Stage 2 | - | - | - |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | - |
| Total | 66,930,612.39 | 43,092,443.98 | 23,838,168.41 |
| Category | Book balance | 12-month expected credit losses rate (%) | Provision for bad debt | Carrying amount |
~ 186 ~
| Category | Book balance | 12-month expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | - | - | - | - |
| Provision for bad debt recognised collectively | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
| Including: Group1 | - | - | - | - |
| Group2 | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
| Total | 26,079,663.04 | 8.59 | 2,241,494.63 | 23,838,168.41 |
| Aging | 31 December 2019 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Within one year | 21,391,891.49 | 401,407.90 | 1.88 |
| Including:1-6months | 16,704,667.12 | 167,046.67 | 1.00 |
| 7-12months | 4,687,224.37 | 234,361.23 | 5.00 |
| 1-2 years | 2,804,920.23 | 280,492.02 | 10.00 |
| 2-3 years | 646,513.23 | 323,256.62 | 50.00 |
| Over 3 years | 1,236,338.09 | 1,236,338.09 | 100.00 |
| Total | 26,079,663.04 | 2,241,494.63 | 8.59 |
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | 40,850,949.35 | 100.00 | 40,850,949.35 | - |
| Provision for bad debt recognised collectively | - | - | - | - |
~ 187 ~
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Including: Group1 | - | - | - | - |
| Group2 | - | - | - | - |
| Total | 40,850,949.35 | 100.00 | 40,850,949.35 | - |
| Entity name | 31 December 2019 | |||
| Book balance | Provision for bad debt | Provision ratio (%) | Reason | |
| Hengxin Securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Jianqiao Securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | The enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | 100.00 | |
| Category | 31 December 2019 | Changes during the reporting period | 31 December 2020 | ||
| Provision | Recovery or reversal | Write-off | |||
| Provision for bad debt recognised individually | 40,850,949.35 | - | 43,554.94 | - | 40,807,394.41 |
| Provision for bad debt recognised collectively | 2,241,494.63 | 415,354.13 | - | - | 2,656,848.76 |
| Total | 43,092,443.98 | 415,354.13 | 43,554.94 | - | 43,464,243.17 |
~ 188 ~
| Entity name | Nature | Balance at 31 December 2020 | Aging | Proportion of the balance to the total other receivables (%) | Provision for bad debt |
| Entity 1 | Securities investment | 28,966,894.41 | Over 3 years | 37.66 | 28,966,894.41 |
| Entity 2 | Securities investment | 11,840,500.00 | Over 3 years | 15.39 | 11,840,500.00 |
| Entity 3 | Others | 6,751,537.12 | Within 6 months | 8.78 | 67,515.37 |
| Entity 4 | Others | 2,000,000.00 | Within 6 months | 2.60 | 20,000.00 |
| Entity 5 | Others | 928,980.82 | Within 6 months | 1.21 | 9,289.81 |
| Total | —— | 50,487,912.35 | —— | 65.64 | 40,904,199.59 |
| Items | 31 December 2020 | ||
| Book balance | Provision for impairment | Carrying amount | |
| Raw materials and package materials | 191,873,650.49 | 13,274,081.73 | 178,599,568.76 |
| Semi-finished goods and work in process | 2,861,343,683.53 | - | 2,861,343,683.53 |
| Finished goods | 387,506,042.80 | 10,568,486.13 | 376,937,556.67 |
| Total | 3,440,723,376.82 | 23,842,567.86 | 3,416,880,808.96 |
| Items | 31 December 2019 |
~ 189 ~
| Book balance | Provision for impairment | Carrying amount | |
| Raw materials and package materials | 177,976,566.48 | 14,772,001.80 | 163,204,564.68 |
| Semi-finished goods and work in process | 2,291,945,127.85 | - | 2,291,945,127.85 |
| Finished goods | 562,948,591.57 | 3,046,322.32 | 559,902,269.25 |
| Total | 3,032,870,285.90 | 17,818,324.12 | 3,015,051,961.78 |
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | ||
| Provision | Others | Reversal or written-down | Others | |||
| Raw materials and package materials | 14,772,001.80 | 3,835,130.58 | - | 5,333,050.65 | - | 13,274,081.73 |
| Finished goods | 3,046,322.32 | 9,347,356.90 | - | 1,825,193.09 | - | 10,568,486.13 |
| Total | 17,818,324.12 | 13,182,487.48 | - | 7,158,243.74 | - | 23,842,567.86 |
| Items | 31 December 2020 | 31 December 2019 |
| Deductible tax | 77,848,744.83 | 114,439,167.07 |
| Accrued Interests on deposits | 19,563,936.43 | - |
| Total | 97,412,681.26 | 114,439,167.07 |
| Investees | 31 December | Changes during the reporting period |
~ 190 ~
| 2019 | Increase during the reporting period | Decrease during the reporting period | Gains /(losses) on investments under the equity method | Adjustments of other comprehensive income | Changes in other equity | |
| Associates | ||||||
| Beijing Guge Trading Co., Ltd. | 4,678,282.24 | - | - | 237,293.59 | - | - |
| Total | 4,678,282.24 | - | - | 237,293.59 | - | - |
| Investees | Changes during the reporting period | 31 December 2020 | Provision for impairment | ||
| Declaration of cash dividends or distribution of profit | Provision for impairment | Others | |||
| Associates | |||||
| Beijing Guge Trading Co., Ltd. | - | - | - | 4,915,575.83 | - |
| Total | - | - | - | 4,915,575.83 | - |
| Items | Building and plants | Land use rights | Total |
| Initial cost: | |||
| Balance at 31 December 2019 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| Increase during the reporting period | - | - | - |
| Decrease during the reporting period | - | - | - |
| Balance at 31 December 2020 | 8,680,555.75 | 2,644,592.00 | 11,325,147.75 |
| Accumulated depreciation and amortisation: | |||
| Balance at 31 December 2019 | 5,915,361.87 | 699,699.86 | 6,615,061.73 |
~ 191 ~
| Items | Building and plants | Land use rights | Total |
| Increase during the reporting period | 261,115.92 | 56,026.56 | 317,142.48 |
| (i) Provision | 261,115.92 | 56,026.56 | 317,142.48 |
| Decrease during the reporting period | - | - | - |
| Balance at 31 December 2020 | 6,176,477.79 | 755,726.42 | 6,932,204.21 |
| Provision for impairment | |||
| Balance at 31 December 2019 | - | - | - |
| Increase during the reporting period | - | - | - |
| Decrease during the reporting period | - | - | - |
| Balance at 31 December 2020 | - | - | - |
| Carrying amount: | |||
| Balance at 31 December 2020 | 2,504,077.96 | 1,888,865.58 | 4,392,943.54 |
| Balance at 31 December 2019 | 2,765,193.88 | 1,944,892.14 | 4,710,086.02 |
| Items | 31 December 2020 | 31 December 2019 |
| Fixed assets | 1,797,789,271.62 | 1,722,572,998.79 |
| Disposal of fixed assets | - | - |
| Total | 1,797,789,271.62 | 1,722,572,998.79 |
| Items | Buildings and constructions | Machinery equipments | Vehicles | Office equipment and others | Total |
| Initial cost: | |||||
| Balance at 31 December 2019 | 2,034,543,017.61 | 1,002,176,887.05 | 60,967,511.99 | 170,904,070.21 | 3,268,591,486.86 |
| Increase during the | 84,069,717.58 | 169,673,678.76 | 5,352,313.13 | 38,263,511.99 | 297,359,221.46 |
~ 192 ~
| Items | Buildings and constructions | Machinery equipments | Vehicles | Office equipment and others | Total |
| reporting period | |||||
| (i) Acquisition | 171,880.73 | 18,913,312.33 | 5,258,152.77 | 11,163,747.30 | 35,507,093.13 |
| (ii)Transfer from construction in progress | 83,897,836.85 | 150,760,366.43 | 94,160.36 | 27,099,764.69 | 261,852,128.33 |
| Decrease during the reporting period | 8,589,698.65 | 34,019,331.20 | 3,263,935.81 | 6,955,972.40 | 52,828,938.06 |
| (i) Disposal | 8,589,698.65 | 34,019,331.20 | 3,263,935.81 | 6,955,972.40 | 52,828,938.06 |
| Balance at 31 December 2020 | 2,110,023,036.54 | 1,137,831,234.61 | 63,055,889.31 | 202,211,609.80 | 3,513,121,770.26 |
| Accumulated depreciation: | |||||
| Balance at 31 December 2019 | 810,920,134.01 | 575,262,319.33 | 51,633,020.95 | 103,244,644.01 | 1,541,060,118.30 |
| Increase during the reporting period | 84,900,311.29 | 104,389,044.13 | 5,779,298.80 | 18,712,473.41 | 213,781,127.63 |
| (i) Provision | 84,900,311.29 | 104,389,044.13 | 5,779,298.80 | 18,712,473.41 | 213,781,127.63 |
| Decrease during the reporting period | 7,934,994.13 | 26,758,281.83 | 3,166,017.73 | 6,717,992.88 | 44,577,286.57 |
| (i) Disposal | 7,934,994.13 | 26,758,281.83 | 3,166,017.73 | 6,717,992.88 | 44,577,286.57 |
| Balance at 31 December 2020 | 887,885,451.17 | 652,893,081.63 | 54,246,302.02 | 115,239,124.54 | 1,710,263,959.36 |
| Provision for impairment: | |||||
| Balance at 31 December 2019 | 3,311,778.44 | 1,053,187.15 | 7,047.07 | 586,357.11 | 4,958,369.77 |
| Increase during the reporting period | 6,279.58 | 903,208.61 | - | 3,071.65 | 912,559.84 |
~ 193 ~
| Items | Buildings and constructions | Machinery equipments | Vehicles | Office equipment and others | Total |
| (i) Provision | 6,279.58 | 903,208.61 | - | 3,071.65 | 912,559.84 |
| Decrease during the reporting period | 513,733.16 | 281,975.67 | - | 6,681.50 | 802,390.33 |
| (i) Disposal | 513,733.16 | 281,975.67 | - | 6,681.50 | 802,390.33 |
| Balance at 31 December 2020 | 2,804,324.86 | 1,674,420.09 | 7,047.07 | 582,747.26 | 5,068,539.28 |
| Carrying amount: | |||||
| Balance at 31 December 2020 | 1,219,333,260.51 | 483,263,732.89 | 8,802,540.22 | 86,389,738.00 | 1,797,789,271.62 |
| Balance at 31 December 2019 | 1,220,311,105.16 | 425,861,380.57 | 9,327,443.97 | 67,073,069.09 | 1,722,572,998.79 |
| Item | Initial cost | Accumulated depreciation | Provision for impairment | Carrying amount | Note |
| Buildings and constructions | 8,137,031.10 | 5,246,394.21 | 2,804,324.86 | 86,312.03 | —— |
| Machinery equipments | 9,755,253.35 | 7,900,133.34 | 1,674,420.09 | 180,699.92 | —— |
| Vehicles | 58,119.66 | 49,329.00 | 7,047.07 | 1,743.59 | —— |
| Office equipment and others | 875,058.18 | 265,172.67 | 582,747.26 | 27,138.25 | —— |
| Total | 18,825,462.29 | 13,461,029.22 | 5,068,539.28 | 295,893.79 | —— |
| Items | Carrying amount | Reason |
| Buildings and constructions | 679,361,126.29 | Under processing |
| Total | 679,361,126.29 | —— |
~ 194 ~
reporting period.
5.13 Construction in Progress
(a) Construction in progress by category
| Items | 31 December 2020 | 31 December 2019 |
| Construction in progress | 279,169,201.60 | 183,984,816.07 |
| Construction materials | - | - |
| Total | 279,169,201.60 | 183,984,816.07 |
| Items | 31 December 2020 | 31 December 2019 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Suizhou new plant phase I project | 135,930,812.66 | - | 135,930,812.66 | 40,023,041.23 | - | 40,023,041.23 |
| Smart park project | 54,494,827.90 | - | 54,494,827.90 | - | - | - |
| Brewing automatization technological improvement project | 42,832,649.99 | - | 42,832,649.99 | 74,782,393.43 | - | 74,782,393.43 |
| Liquid filling line renovation project | 14,835,486.72 | - | 14,835,486.72 | 5,934,194.72 | - | 5,934,194.72 |
| Gujing plant area 11# liquor warehouse | 11,166,144.14 | - | 11,166,144.14 | - | - | - |
| Experience center project | 8,064,287.27 | - | 8,064,287.27 | - | - | - |
~ 195 ~
| Gujing academy project | 5,538,005.31 | - | 5,538,005.31 | - | - | - |
| Furnace project (No.5) | - | - | - | 43,893,912.18 | - | 43,893,912.18 |
| Gujing digital marketing project | - | - | - | 2,150,943.39 | - | 2,150,943.39 |
| Machine installment | - | - | - | 10,393,296.42 | - | 10,393,296.42 |
| Renovation project of potential safety concerns | - | - | - | 387,770.85 | - | 387,770.85 |
| Other individual project | 6,306,987.61 | - | 6,306,987.61 | 6,419,263.85 | - | 6,419,263.85 |
| Total | 279,169,201.60 | - | 279,169,201.60 | 183,984,816.07 | - | 183,984,816.07 |
| Projects | Budget (ten thousand yuan) | 31 December 2019 | Increase during the reporting period | Amount transferred to fixed asset | Decrease during the reporting period | 31 December 2020 |
| Suizhou new plant phase I project | 26,000.00 | 40,023,041.23 | 95,907,771.43 | - | - | 135,930,812.66 |
| Smart park project | 828,965.74 | - | 54,494,827.90 | - | - | 54,494,827.90 |
| Brewing automatization technological improvement project | 27,430.00 | 74,782,393.43 | 96,749,693.99 | 128,699,437.43 | - | 42,832,649.99 |
| Liquid filling line renovation project | 4,000.00 | 5,934,194.72 | 9,596,504.38 | 695,212.38 | - | 14,835,486.72 |
~ 196 ~
| Gujing plant area 11# liquor warehouse | 9,000.00 | - | 11,166,144.14 | - | - | 11,166,144.14 |
| Experience center project | 3,760.00 | - | 16,098,427.09 | - | 8,034,139.82 | 8,064,287.27 |
| Gujing academy project | 49,900.00 | - | 5,538,005.31 | - | - | 5,538,005.31 |
| Furnace project (No.5) | 7,134.35 | 43,893,912.18 | 24,939,614.81 | 68,833,526.99 | - | - |
| Gujing digital marketing project | 4,190.15 | 2,150,943.39 | 8,746,785.78 | - | 10,897,729.17 | - |
| Machine installment | 10,834.65 | 10,393,296.42 | 8,236,912.72 | 15,322,520.05 | 3,307,689.09 | - |
| Renovation project of potential safety concerns | 18,010.76 | 387,770.85 | 166,187.58 | 553,958.43 | - | - |
| Other individual projects | 7,577.52 | 6,419,263.85 | 66,947,374.31 | 47,747,473.05 | 19,312,177.50 | 6,306,987.61 |
| Total | 996,803.17 | 183,984,816.07 | 398,588,249.44 | 261,852,128.33 | 41,551,735.58 | 279,169,201.60 |
| Projects | Proportion of project input to budgets (%) | Rate of progress | Cumulative amount of interest capitalisation | Including: interest capitalised during the reporting period | Interest capitalisation rate during the reporting period (%) | Source of funds |
~ 197 ~
| Projects | Proportion of project input to budgets (%) | Rate of progress | Cumulative amount of interest capitalisation | Including: interest capitalised during the reporting period | Interest capitalisation rate during the reporting period (%) | Source of funds |
| Suizhou new plant phase I project | 52.28 | 52.28 | - | - | - | Enterprise’s own fund |
| Smart park project | 0.66 | 0.66 | - | - | - | Enterprise’s own fund |
| Brewing automatization technological improvement project | 70.86 | 88.00 | - | - | - | Enterprise’s own fund |
| Liquid filling line renovation project | 38.83 | 90.00 | - | - | - | Enterprise’s own fund |
| Gujing plant area 11# liquor warehouse | 12.41 | 65.00 | - | - | - | Enterprise’s own fund |
| Experience center project | 42.81 | 90.00 | - | - | - | Enterprise’s own fund |
| Gujing academy project | 1.11 | 1.11 | - | - | - | Enterprise’s own fund |
| Furnace project (No.5) | 96.48 | 100.00 | - | - | - | Enterprise’s own fund |
| Gujing digital marketing project | 95.26 | 100.00 | - | - | - | Enterprise’s own fund |
| Machine installment | 36.85 | 100.00 | - | - | - | Enterprise’s own fund |
~ 198 ~
| Projects | Proportion of project input to budgets (%) | Rate of progress | Cumulative amount of interest capitalisation | Including: interest capitalised during the reporting period | Interest capitalisation rate during the reporting period (%) | Source of funds |
| Renovation project of potential safety concerns | 83.08 | 100.00 | Enterprise’s own fund | |||
| Other individual projects | 66.92 | 69.00 | - | - | - | Enterprise’s own fund |
| Total | —— | —— | —— | —— | —— | —— |
| Items | Land use rights | Software | Patents and Trademark | Total |
| Initial cost: | ||||
| Balance at 31 December 2019 | 683,451,302.56 | 105,085,318.08 | 215,006,066.19 | 1,003,542,686.83 |
| Increase during the reporting period | 163,292,427.79 | 20,121,514.49 | - | 183,413,942.28 |
| (i) Acquisition | 158,774,127.79 | 1,171,289.09 | - | 159,945,416.88 |
| (ii) Transfer from construction in progress | 4,518,300.00 | 18,950,225.40 | - | 23,468,525.40 |
| Decrease during the reporting period | - | - | - | - |
| (i) Disposal | - | - | - | - |
~ 199 ~
| Items | Land use rights | Software | Patents and Trademark | Total |
| Balance at 31 December 2020 | 846,743,730.35 | 125,206,832.57 | 215,006,066.19 | 1,186,956,629.11 |
| Accumulated amortisation: | ||||
| Balance at 31 December 2019 | 143,777,958.04 | 27,857,857.39 | 46,188,938.64 | 217,824,754.07 |
| Increase during the reporting period | 14,238,731.36 | 20,150,617.77 | 30,548.12 | 34,419,897.25 |
| (i) Provision | 14,238,731.36 | 20,150,617.77 | 30,548.12 | 34,419,897.25 |
| Decrease during the reporting period | - | - | - | - |
| (i) Disposal | - | - | - | - |
| Balance at 31 December 2020 | 158,016,689.40 | 48,008,475.16 | 46,219,486.76 | 252,244,651.32 |
| Provision for impairment: | ||||
| Balance at 31 December 2019 | - | - | - | - |
| Increase during the reporting period | - | - | - | - |
| Decrease during the reporting period | - | - | - | - |
| Balance at 31 December 2020 | - | - | - | - |
| Carrying amount: | - | |||
| Balance at 31 December 2020 | 688,727,040.95 | 77,198,357.41 | 168,786,579.43 | 934,711,977.79 |
| Balance at 31 December 2019 | 539,673,344.52 | 77,227,460.69 | 168,817,127.55 | 785,717,932.76 |
| Investees or matters that goodwill arising from | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
~ 200 ~
| Business combination | Others | Disposal | Others | |||
| Yellow Crane Tower Wine Co., Ltd. | 478,283,495.29 | - | - | - | - | 478,283,495.29 |
| Total | 478,283,495.29 | - | - | - | - | 478,283,495.29 |
| Investees or matters that goodwill arising from | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | ||
| Provision | Others | Disposal | Others | |||
| Yellow Crane Tower Wine Co., Ltd. | - | - | - | - | - | - |
| Total | - | - | - | - | - | - |
| Investees or matters that goodwill arising from | Main components of CGU or CGUs | Book value (unit: CNY10,000) | Determination method | Whether changes during the reporting period | |||
| Book value of CGU | Book value of goodwill to be allocated | Unconfirmed goodwill attributable to non-controlling interests | Total | ||||
| Yellow Crane Tower Wine Co., Ltd. | Operating asset of Yellow Crane Tower Wine Co., Ltd | 92,276.64 | 47,828.35 | 45,952.73 | 186,057.72 | The cash-generating unit where goodwill lies in has an active market which could generate independent cash flow, therefore taking it as an individual CGU. | no |
~ 201 ~
impairment loss of goodwillRecoverable amount of cash-generating units: determined according to present value ofexpected future cash flow. The future cash flow is estimated based on the five-yearfinancial budget of the CGU metioned above approved by the management, and theperpetual cash flow after five years is determined according to the cash flow in the fifth year.The discount rate for calculating the present value is the appropriate discount rate reflectingthe time value of the current market currency and the specific risk of CGU. Other keyassumptions used in the cash flow forecast of the asset group include expected operatingrevenue, operating cost, growth rate and related expenses. The assumptions above arebased on the Company's operating performance, growth rate, industry level and themanagement's expectation of market development in the previous year.According to the goodwill impairment test of the Company as well as evaluation report(zhongshuizhiyuanpingbaozi [2020] No. 020171) issued by Zhongshuizhiyuan AssetAppraisal Co., Ltd., at the end of the period the Company did not find the recoverableamount of the cash-generating unit containing goodwill was lower than its book value,therefore we suppose no provision for impairment is required.(e) Impact on the impairment test of goodwillThe goodwill CGU of the company has performance commitment at the time of acquisition.For details, please refer to 11. COMMITMENTS AND CONTINGENCIES 11.1 SignificantCommitments (a)Performance commitment in this note. The performance commitment ofthe company has been completed, which has no impact on goodwill impairment test.
5.16 Long-term Deferred Expenses
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | |
| Amortisation | Other decrease | ||||
| Experience center | 26,238,799.46 | 8,034,139.82 | 8,904,858.83 | - | 25,368,080.45 |
| Pottery | 1,836,642.57 | - | 1,836,642.57 | - | 0.00 |
| Sewage treatment project | 3,767,377.05 | - | 922,622.95 | - | 2,844,754.10 |
| Yellow Crane Tower chateau and museum | 11,496,948.62 | - | 3,559,669.90 | - | 7,937,278.72 |
| Gujing party building | 4,727,272.73 | - | 1,181,818.18 | - | 3,545,454.55 |
~ 202 ~
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | |
| Amortisation | Other decrease | ||||
| cultural center | |||||
| Yantai wine museum project | 1,293,370.71 | 90,970.76 | 447,231.83 | - | 937,109.64 |
| Other individual project with insignificant amounts | 20,879,695.68 | 9,958,099.60 | 6,878,539.09 | - | 23,959,256.19 |
| Totsl | 70,240,106.82 | 18,083,210.18 | 23,731,383.35 | - | 64,591,933.65 |
| Items | 31 December 2020 | 31 December 2019 | ||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairment | 28,911,107.14 | 7,211,407.41 | 22,776,693.89 | 5,688,693.81 |
| Provision for credit impairment | 44,784,157.32 | 11,179,541.79 | 43,861,929.95 | 10,955,709.29 |
| Unrealized intragroup profit | 31,616,173.72 | 7,904,043.43 | 32,086,076.52 | 8,021,519.13 |
| Deferred income | 75,111,997.53 | 18,270,618.94 | 72,778,437.92 | 17,941,534.40 |
| Deductible losses | 43,272,801.87 | 10,777,899.23 | - | - |
| Carry-over of payroll payables deductible during the next period | 21,874,338.70 | 5,468,584.68 | 32,995,460.19 | 8,248,865.05 |
| Accrued expenses and discount | 144,731,955.22 | 36,160,326.47 | 158,552,891.33 | 39,638,222.83 |
| Total | 390,302,531.50 | 96,972,421.95 | 363,051,489.80 | 90,494,544.51 |
~ 203 ~
(b) Deferred tax liabilities before offsetting
| Items | 31 December 2020 | 31 December 2019 | ||
| Deductible temporary differences | Deferred tax liabilities | Deductible temporary differences | Deferred tax liabilities | |
| Difference in accelerated depreciation of fixed assets | 73,753,668.04 | 18,438,417.01 | 73,614,107.09 | 18,403,526.77 |
| Assets appreciation arising from business combination not under common control | 381,654,221.40 | 95,413,555.35 | 384,290,207.88 | 96,072,551.97 |
| Changes in fair value of held-for-trading financial assets | 3,877,915.51 | 969,478.88 | 17,585,151.48 | 4,396,287.87 |
| Total | 459,285,804.95 | 114,821,451.24 | 475,489,466.45 | 118,872,366.61 |
| Item | 31 December 2020 | 31 December 2019 |
| Deductible losses | - | 8,072,655.25 |
| Total | - | 8,072,655.25 |
| Year | 31 December 2020 | 31 December 2019 | Note |
| 2020 | - | 1,981,272.15 | |
| 2021 | - | 1,463,251.49 | |
| 2022 | - | 827,103.78 | |
| 2023 | - | 757,354.20 | |
| 2024 | - | 3,043,673.63 | |
| Total | - | 8,072,655.25 |
~ 204 ~
5.18 Other Non-current Assets
| Items | 31 December 2020 | 31 December 2019 |
| Prepayments for equipment and constructions | 5,943,717.02 | 4,148,686.00 |
| Total | 5,943,717.02 | 4,148,686.00 |
| Items | 31 December 2020 | 31 December 2019 |
| Credit Loan | 70,665,500.00 | - |
| Total | 70,665,500.00 | - |
| Category | 31 December 2020 | 31 December 2019 |
| Bank acceptance bills | 140,540,000.00 | 654,965,064.82 |
| Commercial acceptance bills | 74,535.60 | 48,714,582.04 |
| Total | 140,614,535.60 | 703,679,646.86 |
| Items | 31 December 2020 | 31 December 2019 |
| Payments for goods | 299,936,875.62 | 399,583,249.41 |
| Payments for constructions and equipment | 135,720,442.04 | 88,412,144.22 |
| Others | 69,549,244.20 | 75,498,801.77 |
| Total | 505,206,561.86 | 563,494,195.40 |
~ 205 ~
(b) Significant accounts payable with aging of over one year
| Items | 31 December 2020 | Reason |
| Supplier 1 | 2,252,093.02 | Final payment |
| Supplier 2 | 881,426.49 | Payment for goods |
| Supplier 3 | 769,163.75 | Final payment |
| Supplier 4 | 577,691.84 | Final payment |
| Supplier 5 | 393,392.70 | Final payment |
| Total | 4,873,767.80 |
| Items | 31 December 2020 | 31 December 2019 |
| Advances for goods | - | 529,863,011.73 |
| Total | - | 529,863,011.73 |
| Items | 31 December 2020 | 31 December 2019 |
| Contract Liabilities for goods | 1,206,573,886.26 | Not applicable |
| Total | 1,206,573,886.26 | Not applicable |
~ 206 ~
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| Short-term employee benefit | 453,674,655.69 | 2,363,049,307.93 | 2,320,250,382.05 | 496,473,581.57 |
| Post-employment benefits-defined contribution plans | 514,877.20 | 60,266,905.72 | 59,126,249.73 | 1,655,533.19 |
| Termination benefits | - | - | - | - |
| Other benefits due within one year | - | - | - | - |
| Total | 454,189,532.89 | 2,423,316,213.65 | 2,379,376,631.78 | 498,129,114.76 |
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| Salaries, bonuses, allowances and subsidies | 357,387,670.42 | 2,090,140,641.18 | 2,029,493,497.91 | 418,034,813.69 |
| Employee benefits | 45,069.27 | 82,624,263.42 | 82,669,332.69 | - |
| Social insurance | 607,379.61 | 35,147,423.07 | 35,268,783.10 | 486,019.58 |
| Including: Health Insurance | 601,649.18 | 34,354,234.26 | 34,469,863.86 | 486,019.58 |
| Injury insurance | 5,730.43 | 793,188.81 | 798,919.24 | - |
| Housing accumulation fund | 4,465,854.45 | 69,843,126.65 | 69,966,359.78 | 4,342,621.32 |
| Labour union funds and employee education funds | 73,606,168.29 | 23,586,101.67 | 26,379,958.66 | 70,812,311.30 |
| Enterprise annuity | 17,562,513.65 | 61,707,751.94 | 76,472,449.91 | 2,797,815.68 |
| Total | 453,674,655.69 | 2,363,049,307.93 | 2,320,250,382.05 | 496,473,581.57 |
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| 1. Basic endowment insurance | 509,340.98 | 58,003,536.93 | 56,857,344.72 | 1,655,533.19 |
~ 207 ~
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| 2. Unemployment insurance | 5,536.22 | 2,263,368.79 | 2,268,905.01 | - |
| Total | 514,877.20 | 60,266,905.72 | 59,126,249.73 | 1,655,533.19 |
| Items | 31 December 2020 | 31 December 2019 |
| Value added tax (VAT) | 93,836,793.23 | 16,929,480.44 |
| Consumption tax | 144,069,975.35 | 347,582,441.49 |
| Enterprise income tax | 78,334,425.91 | 94,038,327.53 |
| Individual income tax | 2,966,503.37 | 1,173,190.21 |
| Urban maintenance and construction tax | 12,449,531.95 | 9,328,392.65 |
| Stamp duty | 909,983.20 | 1,058,588.17 |
| Educational surcharge | 11,829,108.81 | 7,991,963.70 |
| Others | 4,746,370.28 | 4,800,725.40 |
| Total | 349,142,692.10 | 482,903,109.59 |
| Items | 31 December 2020 | 31 December 2019 |
| Interest payable | - | - |
| Dividend payable | - | - |
| Other payables | 1,396,599,161.14 | 1,315,878,229.01 |
| Total | 1,396,599,161.14 | 1,315,878,229.01 |
| Items | 31 December 2020 | 31 December 2019 |
| Security deposit and guarantee | 1,280,042,883.26 | 1,206,935,123.77 |
~ 208 ~
| Items | 31 December 2020 | 31 December 2019 |
| Warranty | 41,210,694.26 | 42,966,560.82 |
| Personal housing fund paid by company | 4,342,621.32 | 4,465,854.45 |
| Others | 71,002,962.30 | 61,510,689.97 |
| Total | 1,396,599,161.14 | 1,315,878,229.01 |
| Items | 31 December 2020 | 31 December 2019 |
| Accrued expenses | 164,008,324.26 | 197,484,121.41 |
| The VAT tax liability has not yet occurred and needs to be recognized as the value-added tax of the output tax in the subsequent periods | 156,784,058.77 | - |
| Total | 320,792,383.03 | 197,484,121.41 |
| Items | 31 December 2020 | 31 December 2019 |
| Credit Loan | 60,000,000.00 | - |
| Accrued interest | 117,638.89 | - |
| Total | 60,117,638.89 | - |
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | Reason |
| Government grants | 72,778,437.92 | 7,882,000.00 | 5,548,440.39 | 75,111,997.53 | Grants received from government |
| Total | 72,778,437.92 | 7,882,000.00 | 5,548,440.39 | 75,111,997.53 |
~ 209 ~
(b) Items related to government grants
| Items | 31 December 2019 | Increase during the reporting period | Recognised in other income during the reporting period | Other changes | 31 December 2020 | Related to assets/Related to income |
| Subsidy for Suizhou new factory infrastructure | 35,338,000.00 | - | 0.00 | - | 35,338,000.00 | Related to asset |
| Refund of Land payment | 22,562,827.93 | - | 530,641.33 | - | 22,032,186.60 | Related to asset |
| Funds for strategic emerging industry agglomeration development base | 798,080.00 | 2,000,000.00 | 422,719.98 | - | 2,375,360.02 | Related to asset |
| Comprehensive subsidy fund for air pollution prevention and control | 2,345,083.29 | 300,000.00 | 265,613.82 | - | 2,379,469.47 | Related to asset |
| Instrument subsidy | 1,550,437.50 | 286,000.00 | 155,259.30 | - | 1,681,178.20 | Related to asset |
| Subsidy funds for strong manufacturing province and private economy development projects in 2019 | - | 1,870,000.00 | 311,162.31 | - | 1,558,837.69 | Related to asset |
| Anhui province subsidy of innovative province construction capacity for independent innovation | 1,948,120.00 | - | 730,545.00 | - | 1,217,575.00 | Related to asset |
| Funds for research projects of koji-making Technology | 1,000,000.00 | 130,000.00 | - | - | 1,130,000.00 | Related to asset |
~ 210 ~
| Subsidy for technical transformation of No.2 boiler | - | 1,000,000.00 | 18,518.52 | - | 981,481.48 | Related to asset |
| Equipment subsidy | 1,068,028.16 | 16,000.00 | 288,116.33 | - | 795,911.83 | Related to asset |
| Gujing Zhangji wine cellar optimization and reconstruction project | 835,208.43 | - | 47,499.96 | - | 787,708.47 | Related to asset |
| Subsidy for key technical cooperation project on the authenticity of important food isotopes | 600,000.00 | - | - | - | 600,000.00 | Related to asset |
| Subsidy for food safety improvement project | 689,655.25 | - | 137,931.00 | - | 551,724.25 | Related to asset |
| Anhui province development of direct funds of service industry | 795,122.12 | - | 292,682.88 | - | 502,439.24 | Related to asset |
| Specific funds for side management of power demand | 516,000.00 | - | 144,000.00 | - | 372,000.00 | Related to asset |
| Automation of check and storage, on-line monitoring of product quality | 265,625.00 | - | 93,750.00 | - | 171,875.00 | Related to asset |
| Motor and boiler energy-saving technical transformation project | 275,000.24 | - | 137,499.96 | - | 137,500.28 | Related to asset |
| Wine production system technical transformation | 192,708.47 | 2,280,000.00 | 62,499.96 | - | 2,410,208.51 | Related to asset |
| Intelligent solid brewing technology innovation project | 119,791.53 | - | 31,250.04 | - | 88,541.49 | Related to asset |
| Enterprise development | 22,500.00 | - | 22,500.00 | - | - | Related to |
~ 211 ~
| funds | asset | |||||
| Internet traceability system project | 1,856,250.00 | - | 1,856,250.00 | - | - | Related to asset |
| Total | 72,778,437.92 | 7,882,000.00 | 5,548,440.39 | - | 75,111,997.53 | —— |
| Item | 31 December 2019 | Changes during the reporting period (+,-) | 31 December 2020 | ||||
| New issues | Bonus issues | Capitalisation of reserves | Others | Subtotal | |||
| Number of total shares | 503,600,000.00 | - | - | - | - | - | 503,600,000.00 |
| Items | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| Capital premium (share premium) | 1,262,552,456.05 | - | - | 1,262,552,456.05 |
| Other capital reserves | 32,853,136.20 | - | - | 32,853,136.20 |
| Total | 1,295,405,592.25 | - | - | 1,295,405,592.25 |
| Item | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 |
| Statutory surplus reserves | 256,902,260.27 | - | - | 256,902,260.27 |
| Total | 256,902,260.27 | - | - | 256,902,260.27 |
~ 212 ~
5.33 Retained Earnings
| Items | 2020 | 2019 |
| Balance at the end of last period before adjustments | 6,888,203,911.92 | 5,541,281,341.47 |
| Adjustments for the opening balance (increase /(decrease)) | - | 4,794,830.59 |
| Balance at the beginning of the reporting period after adjustments | 6,888,203,911.92 | 5,546,076,172.06 |
| Add: net profit attributable to owners of the parent company for the reporting period | 1,854,576,249.29 | 2,097,527,739.86 |
| Payment of ordinary share dividends | 755,400,000.00 | 755,400,000.00 |
| Balance at the end of the reporting period | 7,987,380,161.21 | 6,888,203,911.92 |
| Items | 2020 | 2019 | ||
| Revenue | Cost of Sales | Revenue | Cost of Sales | |
| Principal activities | 10,236,883,038.46 | 2,522,906,977.56 | 10,359,521,016.94 | 2,389,208,627.75 |
| Other activities | 55,181,495.95 | 26,907,967.20 | 57,440,567.29 | 36,838,297.14 |
| Total | 10,292,064,534.41 | 2,549,814,944.76 | 10,416,961,584.23 | 2,426,046,924.89 |
| Items | 2020 | 2019 |
| Consumption tax | 1,343,748,348.14 | 1,310,755,555.59 |
| Urban maintenance and construction tax and educational surcharge | 231,441,505.09 | 239,699,123.64 |
| Land use tax | 13,696,863.78 | 9,702,285.09 |
| Property tax | 17,123,738.65 | 11,812,243.00 |
| Stamp duty | 8,853,581.53 | 9,282,035.09 |
| Others | 10,425,132.36 | 11,654,311.63 |
| Total | 1,625,289,169.55 | 1,592,905,554.04 |
~ 213 ~
5.36 Selling and Distribution Expenses
| Items | 2020 | 2019 |
| Employment benefits | 723,874,977.05 | 539,175,110.66 |
| Travel fees | 133,511,390.56 | 133,377,266.84 |
| Advertisement fees | 840,407,171.96 | 876,445,646.88 |
| Transportation charges | - | 52,250,930.23 |
| Comprehensive promotion costs | 755,941,972.88 | 969,501,572.71 |
| Service fees | 578,401,082.92 | 516,683,260.54 |
| Others | 88,840,567.95 | 97,460,433.24 |
| Total | 3,120,977,163.32 | 3,184,894,221.10 |
| Items | 2020 | 2019 |
| Employment benefits | 507,634,459.19 | 418,480,165.12 |
| Office fees | 60,807,905.04 | 45,087,603.23 |
| Maintenance expenses | 46,267,736.17 | 44,265,385.52 |
| Depreciation | 67,142,270.79 | 65,103,145.01 |
| Amortization of intangible assets | 31,267,096.32 | 29,074,836.91 |
| Pollution discharge | 17,742,036.94 | 18,771,523.15 |
| Travel expenses | 10,324,813.18 | 7,637,602.20 |
| Water and electricity charges | 7,613,501.49 | 11,057,588.66 |
| Others | 53,401,761.36 | 45,802,696.65 |
| Total | 802,201,580.48 | 685,280,546.45 |
| Items | 2020 | 2019 |
| Labour cost | 24,471,993.23 | 20,441,413.41 |
| Direct input costs | 3,988,348.08 | 3,975,855.83 |
| Depreciation | 3,084,671.65 | 3,474,875.34 |
| Others | 9,045,123.50 | 14,480,872.75 |
~ 214 ~
| Items | 2020 | 2019 |
| Total | 40,590,136.46 | 42,373,017.33 |
| Items | 2020 | 2019 |
| Interest expenses | 876,815.80 | 33,652,843.25 |
| Less: Interest income | 261,861,342.00 | 133,813,626.35 |
| Net interest expenses | -260,984,526.20 | -100,160,783.10 |
| Net foreign exchange losses | 51,764.56 | 1,594,072.93 |
| Bank charges and others | 96,305.57 | 940,906.66 |
| Total | -260,836,456.07 | -97,625,803.51 |
| Items | 2020 | 2019 | Related to assets /income |
| 1. Government grant recognised in other income | |||
| Including: Government grant related to deferred income (related to assets) | 5,548,440.39 | 4,833,862.63 | Related to assets |
| Government grant directly recognised in current profit or loss (related to income) | 41,926,091.80 | 93,410,607.69 | Related to income |
| Total | 47,474,532.19 | 98,244,470.32 |
| Items | 2020 | 2019 |
| Investment income from long-term equity investments under equity method | 237,293.59 | -221,717.76 |
~ 215 ~
| Items | 2020 | 2019 |
| Gains on disposal of financial assets at fair value through profit or loss | - | - |
| Investment income from held-to-maturity investments during holding period | - | - |
| Investment income from available-for-sale financial assets during holding period | - | - |
| Gains on disposal of financial assets measured at fair value and changes are included into other comprehensive income | -34,923,074.38 | - |
| Investment income from held-for-trading financial assets during holding period | 41,473,224.56 | 126,649,168.04 |
| Others | - | - |
| Total | 6,787,443.77 | 126,427,450.28 |
| Sources of gains on changes in fair value | 2020 | 2019 |
| Held-for-trading financial assets | ||
| Including: Changes in fair value of designated as held-for-trading financial assets | -19,983,181.51 | 17,585,151.48 |
| Total | -19,983,181.51 | 17,585,151.48 |
| Items | 2020 | 2019 |
| Bad debt of notes receivable | 34,938.37 | -34,938.37 |
| Bad debt of accounts receivable | -596,892.02 | -175,624.33 |
~ 216 ~
| Items | 2020 | 2019 |
| Bad debt of other receivables | -371,799.19 | -722,167.14 |
| Total | -933,752.84 | -932,729.84 |
| Items | 2020 | 2019 |
| Impairment of inventories | -13,182,487.48 | -1,078,980.44 |
| Impairment of fixed assets | -912,559.84 | -138,765.07 |
| Total | -14,095,047.32 | -1,217,745.51 |
| Items | 2020 | 2019 |
| Gains/(losses) from disposal of fixed assets, construction in progress, productive biological assets and intangible assets not classified as held for sale | 1,223,536.53 | 252,518.68 |
| Including: Fixed assets | 1,223,536.53 | 252,518.68 |
| Total | 1,223,536.53 | 252,518.68 |
| Items | 2020 | 2019 | Recognized in current extraordinary gains and losses |
| Gains from damage or scrapping of non-current asset | 178.25 | 277,478.76 | 178.25 |
| Government grants irrelevant to daily operation activities | 150,000.00 | 48,707.00 | 150,000.00 |
| Income from penalties and compensation | 34,815,119.51 | 26,507,159.08 | 34,815,119.51 |
| Sales of wastes | 5,743,313.19 | 3,575,405.84 | 5,743,313.19 |
| Accounts payable no need to pay | 23,936,972.51 | 19,614,848.78 | 23,936,972.51 |
~ 217 ~
| Items | 2020 | 2019 | Recognized in current extraordinary gains and losses |
| back | |||
| Others | 1,951,704.61 | 7,782,396.91 | 1,951,704.61 |
| Total | 66,597,288.07 | 57,805,996.37 | 66,597,288.07 |
| Grant program | 2020 | 2019 | Related to assets /income |
| Other incentives | 150,000.00 | 48,707.00 | Related to income |
| Total | 150,000.00 | 48,707.00 | - |
| Items | 2020 | 2019 | Recognized in current extraordinary gains and losses |
| Loss from damage or scrapping of non-current assets | 4,916,354.87 | 6,966,429.07 | 4,916,354.87 |
| Contributions | 21,405,652.43 | - | 21,405,652.43 |
| Others | 940,840.78 | 1,444,027.58 | 940,840.78 |
| Total | 27,262,848.08 | 8,410,456.65 | 27,262,848.08 |
| Items | 2020 | 2019 |
| Current tax expenses | 636,476,576.50 | 702,843,706.67 |
| Deferred tax expenses | -10,528,792.81 | 12,193,478.05 |
| Total | 625,947,783.69 | 715,037,184.72 |
| Items | 2020 |
~ 218 ~
| Profit before tax | 2,473,835,966.72 |
| Income tax expense at the statutory /applicable tax rate | 618,458,991.68 |
| Effect of different tax rate of subsidiaries | -9,877,887.12 |
| Adjustments of impact from prior period income tax | -1,273,870.24 |
| Effect of income that is exempt from taxation | -188,962.63 |
| Effect of non-deductible costs, expenses or losses | 26,346,654.75 |
| Effect of previously unrecognized deductible losses recognised as deferred tax assets | - |
| Effect of deductible temporary differences and deductible losses not recognised as deferred tax assets | - |
| R&D expenses plus deduction | -6,917,142.75 |
| Tax rate adjustment to the beginning balance of deferred income tax assets/liabilities | - |
| Income tax credits | -600,000.00 |
| Total | 625,947,783.69 |
| Items | 2020 | 2019 |
| Security deposit, guarantee and warrenty | 71,271,892.53 | 171,148,971.50 |
| Government grants | 42,815,381.22 | 84,936,396.19 |
| Interest income | 244,206,194.38 | 156,828,015.62 |
| Release of restricted monetary funds | 2,675,000,000.00 | 870,200,000.00 |
| Others | 70,984,823.65 | 40,619,933.12 |
| Total | 3,104,278,291.78 | 1,323,733,316.43 |
| Items | 2020 | 2019 |
| Cash paid in sales and distribution expenses and general and administrative | 1,947,222,615.61 | 2,255,773,662.59 |
~ 219 ~
| Items | 2020 | 2019 |
| expense | ||
| Security deposit, guarantee and warrenty | 7,848,981.62 | 594,283.56 |
| Time deposits or deposits pledged for the issuance of notes payable | 134,308,875.92 | 312,000,000.00 |
| Structured time deposits that cannot be withdrawn in advance | 200,000,000.00 | 2,363,000,000.00 |
| Others | 88,165,064.00 | 27,764,520.81 |
| Total | 2,377,545,537.15 | 4,959,132,466.96 |
| Supplementary information | 2020 | 2019 |
| (i) Adjustments of net profit to cash flows from operating activities: | ||
| Net profit | 1,847,888,183.03 | 2,157,804,594.34 |
| Add: Provisions for impairment of assets | 15,028,800.16 | 2,150,475.35 |
| Depreciation of fixed assets, Investment Properties, oil and gas asset and productive biological assets | 214,098,270.11 | 206,165,530.04 |
| Amortisation of intangible assets | 34,419,897.25 | 29,374,836.96 |
| Amortisation of long-term deferred expenses | 23,731,383.35 | 27,376,736.70 |
| Losses /(gains) on disposal of fixed assets, intangible assets and other long-term assets | -1,223,536.53 | -252,518.68 |
| Losses /(gains) on changes in fair value | 4,916,176.62 | 6,688,950.31 |
| Finance costs /(income) | 19,983,181.51 | -17,585,151.48 |
| Investment losses /(income) | 928,580.36 | 35,246,916.18 |
| Decreases /(increases) in deferred tax assets | -6,787,443.77 | -126,427,450.28 |
| Increases /(decreases) in deferred tax liabilities | -6,477,877.44 | -3,914,373.45 |
| Decreases /(increases) in inventories | -4,050,915.37 | 16,107,851.50 |
| Decreases /(increases) in operating receivables | -415,011,334.66 | -608,824,277.36 |
~ 220 ~
| Supplementary information | 2020 | 2019 |
| Losses /(gains) on changes in fair value | -548,002,635.36 | 258,842,362.46 |
| Increases /(decreases) in operating payables | 104,411,672.19 | 14,492,580.86 |
| Others* | 2,340,691,124.08 | -1,804,800,000.00 |
| Net cash flows from operating activities | 3,624,543,525.53 | 192,447,063.45 |
| (ii)Significant investing and financing activities not involving cash receipts and payments: | ||
| Conversion of debt into capital | - | - |
| Convertible corporate bonds maturing within one year | - | - |
| Fixed assets acquired under finance leases | - | - |
| (iii)Net increases in cash and cash equivalents: | ||
| Cash at the end of the reporting period | 5,636,903,693.74 | 2,944,749,918.09 |
| Less: Cash at the beginning of the reporting period | 2,944,749,918.09 | 835,560,865.12 |
| Add: Cash equivalents at the end of the reporting period | - | - |
| Less: Cash equivalents at the beginning of the reporting period | - | - |
| Net increase in cash and cash equivalents | 2,692,153,775.65 | 2,109,189,052.97 |
| Items | 31 December 2020 | 31 December 2019 |
| (i) Cash | 5,636,903,693.74 | 2,944,749,918.09 |
| Including: Cash on hand | 178,127.77 | 292,465.36 |
| Cash in bank available for immediate use | 5,636,406,199.84 | 2,943,712,121.81 |
| Other monetary funds available for immediate use | 319,366.13 | 745,330.92 |
| (ii) Cash equivalents | - | - |
| Including: Bond investments maturing within three months | - | - |
| (iii) Cash and cash equivalents at the end of the reporting period | 5,636,903,693.74 | 2,944,749,918.09 |
| Including: Restricted cash and cash equivalents of the parent company and the subsidiaries of the group | - | - |
~ 221 ~
5.51 Restricted Assets
| Items | Carrying amount at 31 December 2020 | Reason |
| Cash and cash equivalents | 334,308,875.92 |
| Accounts receivable financing | 104,530,000.00 | Pledged for issuance of bank acceptance bills |
| Total | 438,838,875.92 | —— |
| Items | Amount | Items presented in the statement of financial position | Recognised in current profit or loss or directly as deduct of related cost | Presented items that recognised in current profit or loss or directly as deduct of related cost | |
| 2020 | 2019 | ||||
| Suizhou new plant infrastructure subsidy | 35,338,000.00 | Deferred income | - | - | Other income |
| Refund for land payment | 22,032,186.60 | Deferred income | 530,641.33 | 550,206.18 | Other income |
| Funds for strategic emerging industry agglomeration development base | 2,375,360.02 | Deferred income | 422,719.98 | 222,720.00 | Other income |
| Comprehensive subsidy fund for air pollution prevention and control | 2,379,469.47 | Deferred income | 265,613.82 | 263,000.04 | Other income |
~ 222 ~
| Equipment subsidy | 1,681,178.20 | Deferred income | 155,259.30 | 284,812.50 | Other income |
| Subsidy funds for strong manufacturing province and private economy development projects in 2019 | 1,558,837.69 | Deferred income | 311,162.31 | - | Other income |
| Subsidy for the construction of independent innovation capacity of Anhui Province | 1,217,575.00 | Deferred income | 730,545.00 | 730,545.00 | Other income |
| Research funds of intelligent koji making technology | 1,130,000.00 | Deferred income | - | - | Other income |
| Subsidy for technical transformation of No.2 boiler | 981,481.48 | Deferred income | 18,518.52 | - | Other income |
| Equipment subsidy | 795,911.83 | Deferred income | 288,116.33 | 203,034.21 | Other income |
| Optimization and reconstruction project of Gujing Zhangji liquor store | 787,708.47 | Deferred income | 47,499.96 | 47,499.96 | Other income |
| Subsidy for key technology cooperation project of important food isotope authenticity | 600,000.00 | Deferred income | - | - | Other income |
| Subsidy for food safety improvement project | 551,724.25 | Deferred income | 137,931.00 | 137,931.00 | Other income |
| Anhui province development of direct | 502,439.24 | Deferred income | 292,682.88 | 292,682.88 | Other income |
~ 223 ~
| funds of service industry | |||||
| Specific funds for side management of power demand | 372,000.00 | Deferred income | 144,000.00 | 144,000.00 | Other income |
| Whole process online monitoring of hook and store automation and product quality | 171,875.00 | Deferred income | 93,750.00 | 93,750.00 | Other income |
| Electric motor and boiler energy saving technology transformation project | 137,500.28 | Deferred income | 137,499.96 | 137,499.96 | Other income |
| Wine production system technical transformation | 2,410,208.51 | Deferred income | 62,499.96 | 62,499.96 | Other income |
| Intelligent solid brewing technology innovation project | 88,541.49 | Deferred income | 31,250.04 | 31,250.04 | Other income |
| Enterprise development funds | - | Deferred income | 22,500.00 | 30,000.00 | Other income |
| Internet of things traceability system project | - | Deferred income | 1,856,250.00 | 1,113,750.00 | Other income |
| Energy efficiency renovation project for coal industrial boiler and glass furnace | - | Deferred income | - | 12,750.00 | Other income |
| Bozhou logistics center project | - | Deferred income | - | 60,000.00 | Other income |
| Finance subsidy for technical reconstruction | - | Deferred income | - | 415,930.90 | Other income |
| Total | 75,111,997.53 | - | 5,548,440.39 | 4,833,862.63 | —— |
| Items | Amount | Items presented in | Recognised in current profit or loss | Presented |
~ 224 ~
| the statement of financial position | or directly as deduct of related cost | items that recognised in current profit or loss or directly as deduct of related cost | |||
| 2020 | 2019 | ||||
| Tax refund | 7,142,710.58 | Other income | 7,142,710.58 | 34,825,848.70 | Other income |
| 2020 Manufacturing Power Province Construction Fund | 5,160,000.00 | Other income | 5,160,000.00 | - | Other income |
| Special funds to support the construction of emerging industrial cities in 2020 | 4,600,000.00 | Other income | 4,600,000.00 | - | Other income |
| Financial support from the Treasury Collection and Payment Center in Hanyang District, Wuhan City | 2,364,000.00 | Other income | 2,364,000.00 | - | Other income |
| Unemployment insurance premium refund | 2,280,389.84 | Other income | 2,280,389.84 | - | Other income |
| Wuhan Municipal Administration of Culture and Tourism, Wuhan A-level tourist attractions free of ticket subsidies | 2,220,000.00 | Other income | 2,220,000.00 | - | Other income |
| Hubei University of Science and Technology Industrialization Funds | 2,180,000.00 | Other income | 2,180,000.00 | - | Other income |
~ 225 ~
| Subsidies for air pollution prevention and control from the Environmental Protection Agency | 1,000,000.00 | Other income | 1,000,000.00 | - | Other income |
| Standardization award from Market Supervision and Administration Bureau | 900,000.00 | Other income | 900,000.00 | - | Other income |
| Bozhou Treasury Center Trademark Award | 895,000.00 | Other income | 895,000.00 | - | Other income |
| Energy saving and environmental protection industry fund | - | Other income | - | 500,000.00 | Other income |
| Bonus of Bozhou science and technology bureau | - | Other income | - | 800,000.00 | Other income |
| Incentive payment for manufacturer's subsidiary separation of national development and Reform Commission | - | Other income | - | 500,000.00 | Other income |
| 2019 strong industrial cities special fund for developing private economy | - | Other income | - | 750,000.00 | Other income |
| Unemployment insurance funds and stabilization allowance | - | Other income | - | 39,641,870.00 | Other income |
| Standardization work of Bozhou market | - | Other income | - | 450,000.00 | Other income |
~ 226 ~
| supervision administration in 2018 | |||||
| Subsidy for robot project | - | Other income | - | 300,000.00 | Other income |
| Subsidy from Social Security Bureau | - | Other income | - | 3,750,000.00 | Other income |
| Project funds from Bozhou economic and Information Bureau | - | Other income | - | 1,100,000.00 | Other income |
| 2018 patent project award | - | Other income | - | 400,000.00 | Other income |
| National intellectual property demonstration enterprise award | - | Other income | - | 1,200,000.00 | Other income |
| Subsidy from Bozhou Market Supervision Administration | - | Other income | - | 559,000.00 | Other income |
| Others | 13,183,991.38 | Other income | 13,183,991.38 | 8,633,888.99 | Other income |
| Other not related to daily operation | 150,000.00 | Non operating income | 150,000.00 | 48,707.00 | Non operating income |
| Discounted loans | 992,947.18 | Finance expense | 992,947.18 | Finance expense | |
| Total | 43,069,038.98 | —— | 43,069,038.98 | 93,459,314.69 | —— |
~ 227 ~
7.1 Interests in Subsidiaries
(a) Composition of corporate group
| Name of subsidiary | Principal place of business | Registered Address | Nature of business | Percentage of equity interests held by the Company (%) | Method of acquisition | |
| Direct | Indirect | |||||
| Bozhou Gujing Sales Co., Ltd. (hereafter Gujing Sales) | Anhui Bozhou | Anhui Bozhou | Commercial trade | 100.00 | —— | Investment establishment |
| Anhui Longrui Glass Co., Ltd (hereafter Longrui Glass) | Anhui Bozhou | Anhui Bozhou | Manufacture | 100.00 | —— | Investment establishment |
| Bozhou Gujing Waste Reclamation Co., Ltd. (hereafter Gujing Waste) | Anhui Bozhou | Anhui Bozhou | Waste recycle | 100.00 | —— | Investment establishment |
| Anhui Jinyunlai Culture & Media Co., Ltd. (hereafter Jinyunlai) | Anhui Hefei | Anhui Hefei | Advertisement marketing | 100.00 | —— | Investment establishment |
| Anhui Ruisiweier Technology Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Technical research | 100.00 | —— | Investment establishment |
| Shanghai Gujing Jinhao hotel management company | Shanghai | Shanghai | Hotel management | 100.00 | —— | Business combination under common control |
| Bozhou Gujing Hotel Co., Ltd | Anhui Bozhou | Anhui Bozhou | Hotel operating | 100.00 | —— | Business combination under common control |
| Anhui Yuanqing Environmental Protection Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Sewage treatment | 100.00 | —— | Investment establishment |
| Anhui Gujing Yunshang | Anhui Hefei | Anhui Hefei | Electronic | 100.00 | —— | Investment |
~ 228 ~
| Name of subsidiary | Principal place of business | Registered Address | Nature of business | Percentage of equity interests held by the Company (%) | Method of acquisition | |
| Direct | Indirect | |||||
| Electronic Commerce Co., Ltd | commerce | establishment | ||||
| Anhui Zhenrui Construction Engineering Co., Ltd | Anhui Bozhou | Anhui Bozhou | Construction | 100.00 | —— | Investment establishment |
| Anhui Runanxinke Testing Techology Co., Ltd. | Anhui Bozhou | Anhui Bozhou | Food testing | 100.00 | —— | Investment establishment |
| Anhui Jiudao Culture Media Co., Ltd. | Anhui Hefei | Anhui Hefei | Advertisement marketing | 100.00 | —— | Investment establishment |
| Yellow Crane Tower Wine Co., Ltd | Hubei Wuhan | Hubei Wuhan | Manufacture | 51.00 | Business combination not under common control | |
| Yellow Crane Tower Wine (Xianning) Co., Ltd | Hubei Xianning | Hubei Xianning | Manufacture | —— | 51.00 | Business combination not under common control |
| Yellow Crane Tower Wine (Suizhou) Co., Ltd | Hubei Suizhou | Hubei Suizhou | Manufacture | —— | 51.00 | Business combination not under common control |
| Hubei Junlou Cultural Tourism Co., Ltd. | Hubei Wuhan | Hubei Wuhan | Advertising marketing | —— | 51.00 | Business combination not under common control |
| Hubei Yellow Crane Tower Beverage Co., Ltd | Hubei Xianning | Hubei Xianning | Manufacture | —— | 51.00 | Investment establishment |
| Wuhan Yashibo Technology | Hubei | Hubei | Technology | —— | 51.00 | Investment |
~ 229 ~
| Name of subsidiary | Principal place of business | Registered Address | Nature of business | Percentage of equity interests held by the Company (%) | Method of acquisition | |
| Direct | Indirect | |||||
| Co., Ltd. | Wuhan | Wuhan | development | establishment | ||
| Hubei Xinjia Testing Technology Co., Ltd. | Hubei Xianning | Hubei Xianning | Food testing | —— | 51.00 | Investment establishment |
| Wuhan Tianlong Jindi Technology Development Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | —— | 51.00 | Business combination not under common control |
| Xianning Junhe Sales Co., Ltd | Hubei Xianning | Hubei Xianning | Commercial trade | —— | 51.00 | Business combination not under common control |
| Wuhan Junya Sales Co., Ltd | Hubei Wuhan | Hubei Wuhan | Commercial trade | —— | 51.00 | Investment establishment |
| Suizhou Junhe Commercial Co., Ltd. | Hubei Suizhou | Hubei Suizhou | Commercial trade | —— | 51.00 | Investment establishment |
| Name of subsidiary | Proportion of ownership interest held by non- controlling interests (%) | Profit or loss attributable to non- controlling interests during the reporting period | Dividends declared to distribute to non-controlling interests during the reporting period | Non-controlling interests at the end of the reporting period |
| Yellow Crane Tower Wine Co., Ltd | 49.00 | -6,688,066.26 | 75,792,108.39 | 405,562,772.65 |
| Name of | 31 December 2020 |
~ 230 ~
| subsidiary | Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities |
| Yellow Crane Tower Wine Co., Ltd | 633,542,317.24 | 868,332,173.16 | 1,501,874,490.40 | 482,603,067.57 | 191,592,294.97 | 674,195,362.54 |
| Name of subsidiary | 31 December 2019 | |||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |
| Yellow Crane Tower Wine Co., Ltd | 755,439,438.85 | 742,229,246.05 | 1,497,668,684.90 | 369,369,757.38 | 132,292,912.62 | 501,662,670.00 |
| Name of subsidiary | 2020 | |||
| Revenue | Net profit/(loss) | Total comprehensive income | Net cash flows from operating activities | |
| Yellow Crane Tower Wine Co., Ltd | 516,045,801.88 | -13,649,114.81 | -13,649,114.81 | -22,001,852.09 |
| Name of subsidiary | 2019 | |||
| Revenue | Net profit/(loss) | Total comprehensive income | Net cash flows from operating activities | |
| Yellow Crane Tower Wine Co., Ltd | 1,153,666,330.72 | 123,013,988.73 | 123,013,988.73 | 78,635,264.01 |
~ 231 ~
8. RISKS RELATED TO FINANCIAL INSTRUMENTS
Risks related to the financial instruments of the Company arise from the recognition ofvarious financial assets and financial liabilities during its operation, including credit risk,liquidity risk and market risk.Management of the Company is responsible for determining risk management objectivesand policies related to financial instruments. Operational management is responsible forthe daily risk management through functional departments. Internal audit department isresponsible for the daily supervision of implementation of the risk management policies andprocedures, and report their findings to the audit committee in a timely manner.Overall risk management objective of the Company is to establish risk managementpolicies to minimize the risks without unduly affecting the competitiveness and resilience ofthe Company.
8.1 Credit Risk
Credit risk is the risk of one party of the financial instrument face to a financial loss becausethe other party of the financial instrument fails to fulfill its obligation. The credit risk of theCompany is related to cash and equivalent, notes receivable, accounts receivables, otherreceivables, and long-term receivables. Credit risk of these financial assets is derived fromthe counterparty’s breach of contract. The maximum risk exposure is equal to the carryingamount of these financial instruments.
Cash and cash equivalent of the Company has lower credit risk, as they are mainlydeposited in such financial institutions as commercial bank, of which the Company thinkswith higher reputation and financial position. Notes receivable held by the Company aremainly bank acceptance bills, which have strong liquidity. The Company has formulatedcorresponding bill management and control procedures and has been effectivelyimplemented, which greatly ensures the safety of bill storage and use to ensure the lowcredit risks. The Company only conducts business with customers with good credit rating,and will continue to monitor the balance of accounts receivable to ensure that the Companyavoids the risk of major bad debt losses. The company's largest credit risk exposure is thebook value of each financial asset (including derivative financial instruments) in the balancesheet, and the overall credit risk evaluation is low.
~ 232 ~
8.2 Liquidity Risk
Liquidity risk is the risk of shortage of funds when fulfilling the obligation of settlement bydelivering cash or other financial assets. The Company is responsible for the capitalmanagement of all of its subsidiaries, including short-term investment of cash surplus anddealing with forecasted cash demand by raising loans. The Company’s policy is to monitorthe demand for short-term and long-term floating capital and whether the requirement ofloan contracts is satisfied so as to ensure to maintain adequate cash and cash equivalents.
8.3 Market Risk
The market risk of financial instruments refers to the risk that the fair value or future cashflows of financial instruments will fluctuate due to changes in market prices. Market risksmainly include foreign exchange risk and interest rate risk.(a) Foreign currency riskForeign exchange risk refers to the risk of loss due to exchange rate fluctuations generally.The core business of the Company is on the mainland of China and trading with CNY.Foreign exchange risk risk is minimal.(b)Interest rate riskInterest rate risk refers to the risk that the fair value of financial instruments or future cashflows will fluctuate due to changes in market interest rates. The Company's interest rate riskmainly comes from long-term and short-term bank borrowings. As of 31 December, 2020,the Company has no liabilities calculated with floating interest rates.(c) Other price riskThe Held-for-trading financial assets of the Company is measured by fair value. As a resultof that, the Company bears the risk of the change of security market. To decrease the risk,the management decided that the Company held a combination of several equities andsecurities.
9. FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the levelof the hierarchy in which the lowest level input that is significant to the measurement isclassified:
~ 233 ~
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets orliabilitiesLevel 2: Inputs for the assets or liabilities (other than those included in Level 1) that areeither directly or indirectly observable.Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Assets and Liabilities Measured at Fair Value at 31 December 2020
| Items | Fair value at 31 December 2020 | |||
| Level 1 | Level 2 | Level 3 | Total | |
| Recurring fair value measurements | ||||
| (a) Held-for-trading financial assets | ||||
| (i) Financial assets at fair value through profit or loss | - | 203,877,915.51 | - | 203,877,915.51 |
| Debt instruments | - | - | - | - |
| Bank financial products | - | - | - | - |
| Fund investment | - | 203,877,915.51 | - | 203,877,915.51 |
| (ii) Financial assets measured at fiar value through other comprehensive income | - | - | 1,673,510,794.51 | 1,673,510,794.51 |
| Accounts receivable financing | - | - | 1,673,510,794.51 | 1,673,510,794.51 |
| Total assets measured at fair value on a recurring basis | - | 203,877,915.51 | 1,673,510,794.51 | 1,877,388,710.02 |
~ 234 ~
value and the value of held-for-trading financial assets according to the valuation table of securitiesinvestment fund provided by asset management company.
9.3 Valuation Technique(s), Qualitative and Quantitative Information about the Significant Inputs Used for Fair Value
Measurement in Level 3 on a Recurring or Nonrecurring BasisThe items of fair value measurement in Level 2 of the Company are mainly about receivednotes. Since the maturity of the received notes is mostly shorter than one year, and thecash is expected to be recovered at the denomination when due, we determine its fair valuebased on the denomination.
10. RELATED PARTIES AND RELATED PARTY TRANSACTIONSRecognition of related parties: The Company has control or joint control of, or exercisesignificant influence over another party; or the Company is controlled or jointly controlled, orsignificant influenced by another party.
10.1 General Information of the Parent Company
| Name of the parent | Registered address | Nature of the business | Registered capital | Percentage of equity interests in the Company (%) | Voting rights in the Company (%) |
| AnhuiGujing Group Co., Ltd. | Anhui Bozhou | Beverage, construction material, plastic producst manufacturing | 1,000,000,000.00 | 53.89 | 53.89 |
~ 235 ~
OTHER ENTITIES.
10.4 Other Related Parties of the Company
| Name | Relationship with the Company |
| Anhui Ruifuxiang Food Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing Catering Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Haochidian Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Shanghai Beihai Hotel Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Orient Ruijing Enterprise Investment Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Hengxin Pawn Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Ruineng Thermal Power Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Hefei Gujing Holiday Hotel Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Furuixiang High Protein Feed Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Hotel Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Ruixin Pawn Co. Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Zhongxin Finance Lease Co. Ltd. | An affiliate of the actual controller and controlling |
~ 236 ~
| Name | Relationship with the Company |
| shareholder | |
| Anhui Huixin Finance Invest Group Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Hefei Longxin Financial Management Consulting Co., Ltd | An affiliate of the actual controller and controlling shareholder |
| Bozhou Anxin Micro Finance Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd (Cancelled) | An affiliate of the actual controller and controlling shareholder |
| Anhui Youxin Financing guarantee Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lixin Electronic Commerce Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing International Tourism Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing Health Industry Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lejiu Home Tourism Management Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Shenglong Commercial Co., Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Gujing International Development Co,.Ltd. | An affiliate of the actual controller and controlling shareholder |
| Anhui Lvyuan Ecological Agriculture Co.,Ltd | An affiliate of the actual controller and controlling shareholder |
| Nanjing Suning Real Estate Development Co., Ltd. | Enterprise controlled by Zhang, Guiping, whose a |
~ 237 ~
| Name | Relationship with the Company |
| director of the Company |
| Related parties | Nature of the transaction(s) | 2020 | 2019 |
| Anhui Haochidian Catering Co., Ltd. | Purchase of materials and labor service | 22,586,183.13 | 12,906,491.94 |
| Anhui Gujing Group Co., Ltd. | Purchase of buildings | 9,608,025.00 | - |
| Bozhou Hotel Co., Ltd. | Catering and accommodation service | 6,540,711.38 | 5,761,744.42 |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | Catering and accommodation service | 2,309,426.00 | 6,058,768.50 |
| Anhui Haochidian Catering Co., Ltd. | Catering and accommodation service | 1,419,119.70 | 52,807.43 |
| Anhui Gujing Hotel Management Co., Ltd. | Catering and accommodation service | 1,124,539.94 | 606,319.42 |
| Anhui Ruijing Catering Management Co., Ltd. | Purchase of materials | 623,966.45 | 4,872,511.46 |
| Anhui Ruijing Catering Management Co., Ltd. | Catering and accommodation service | 24,820.00 | - |
~ 238 ~
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | 405,725.64 | 15,915.26 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Purchase of materials and labor service | 653,730.07 | 520,630.53 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Purchase of materials and labor service | 215,018.51 | 89,950.55 |
| Anhui Gujing Health Industry Co., Ltd. | Purchase of materials and labor service | 191,893.81 | 19,433.63 |
| Anhui Gujing International Development Co,.Ltd. | Labor service | 103,773.58 | - |
| Anhui Gujing International Tourism Co., Ltd. | Catering and accommodation service | - | 2,742,924.44 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Purchase of materials | 99,546.43 | - |
| Anhui Gujing Group Co., Ltd. | Purchase of materials | 56,952.00 | 3,900.00 |
| Anhui Youxin Financing Guarantee Co., Ltd. | Labor service | 47,169.81 | - |
| Anhui Ruifuxiang Food Co., Ltd. | Purchase of materials | 31,130.76 | 24,227.98 |
| Anhui Lvyuan Ecological Agriculture Co., Ltd. | Purchase of materials and labor service | 19,562.48 | 1,226,503.81 |
| Anhui Gujing Hotel Management Co., Ltd. | Purchase of materials and labor service | 3,413.21 | 138,836.65 |
~ 239 ~
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd (Cancelled) | Labor service | - | 31,849.06 |
| Anhui Ruijing Catering Management Co., Ltd. | Catering service | - | 51,171.00 |
| Anhui Huixin Finance Invest Group Co. Ltd. | Labor service | - | 57,200.80 |
| Total | —— | 46,064,707.90 | 35,181,186.88 |
| Related parties | Nature of the transaction(s) | 2020 | 2019 |
| Anhui Gujing Health Industry Co., Ltd. | Sales of liquor | 5,254,234.43 | 10,075,939.40 |
| Anhui Gujing International Development Co,.Ltd. | Sales of liquor | 1,649,076.57 | 531,906.52 |
| Anhui Shenglong Commercial Co., Ltd. | Sales of liquor | 1,456,440.72 | 1,045,891.85 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Sales of liquor | 649,884.96 | 5,370,339.55 |
| Anhui Gujing Health Industry Co., Ltd. | Labor service | 232,430.19 | 844,992.46 |
| Anhui Gujing Group Co., Ltd. | Catering and accommodation service | 184,013.00 | 246,231.14 |
| Anhui Gujing Hotel Management Co., Ltd. | Sales of liquor | 122,893.76 | 93,532.67 |
| Anhui Gujing Group Co., Ltd. | Sales of small materials | 94,174.07 | 217,725.29 |
| Bozhou Gujing Huishenglou Catering Co., Ltd. | Sales of liquor | 77,893.81 | 41,023.88 |
| Bozhou Hotel Co., Ltd. | Sales of liquor | 74,628.33 | 17,379.31 |
| Bozhou Ruineng Thermal Power Co., Ltd. | Sales of liquor | 74,150.45 | 312,907.44 |
| Anhui Haochidian Catering Co., Ltd. | Sales of liquor | 71,283.20 | 23,362.83 |
| Anhui Ruijing Business Travel (Group) Co., Ltd. | Catering and accommodation service | 70,217.96 | 49,989.56 |
| Anhui Lejiu Home Tourism Management | Utility fees | 56,413.97 | 305,723.42 |
~ 240 ~
| Co., Ltd. | |||
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Sales of liquor | 44,674.42 | 2,016,097.62 |
| Anhui Huixin Finance invest group Co., Ltd | Sales of liquor | 39,836.29 | 470,513.04 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Sales of liquor | 30,265.48 | - |
| Shanghai Beihai Hotel Co., Ltd | Sales of liquor | 17,203.54 | 16,566.37 |
| Bozhou Anxin Micro Finance Co., Ltd. | Sales of liquor | 15,330.09 | 9,927.68 |
| Anhui Zhongxin Finance Lease Co. Ltd. | Sales of liquor | 14,939.82 | 11,559.56 |
| Anhui Shenglong Commercial Co., Ltd. | Catering and accommodation service | 14,470.00 | 17,223.00 |
| Anhui Hengxin Pawn Co., Ltd. | Sales of liquor | 11,207.09 | 5,352.21 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of liquor | 8,261.95 | 6,837.04 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Labor service | 7,620.00 | - |
| Anhui Lixin Electronic Commerce Co., Ltd. | Sales of liquor | 7,461.93 | 335,889.03 |
| Anhui Ruixin Pawn Co. Ltd. | Sales of liquor | 6,614.16 | 6,453.98 |
| Anhui Gujing International Development Co,.Ltd. | Sales of small materials | 5,437.89 | - |
| Anhui Youxin Financing Guarantee Co., Ltd. | Sales of liquor | 4,983.18 | 5,925.58 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Labor service | 2,889.91 | 17,459.86 |
| Anhui Gujing International Development Co,.Ltd. | Catering and accommodation service | 2,820.00 | 11,940.00 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Sales of small materials | 2,631.13 | - |
| Anhui Gujing Health Industry Co., Ltd. | Sales of small materials | 1,314.60 | 10,036.51 |
| Anhui Gujing Health Industry Co., Ltd. | Catering and accommodation service | 1,250.00 | 37,207.00 |
~ 241 ~
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Catering and accommodation service | 420.00 | 5,155.00 |
| Anhui Gujing International Tourism Co., Ltd. | Catering and accommodation service | - | 206.00 |
| Anhui Gujing International Tourism Co., Ltd. | Sales of small materials | - | 702.45 |
| Anhui Gujing International Tourism Co., Ltd. | Sales of liquor | - | 1,009.71 |
| Anhui Lejiu Home Tourism Management Co., Ltd. | Sales of small materials | - | 11,685.59 |
| Anhui Xinyuan Municipal Garden Engineering Co., Ltd (Cancelled) | Sales of small materials | - | 1,551.27 |
| Bozhou Furuixiang High Protein Feed Co. Ltd. | Sales of liquor | - | 11,405.17 |
| Bozhou Ruineng Thermal Power Co., Ltd. | Labor service | - | 24,866.94 |
| Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | Utility fees | - | 68,741.74 |
| Hefei Gujing Holiday Hotel Co., Ltd. | Catering and accommodation service | - | 13,139.65 |
| Anhui Lvyuan Ecological Agriculture Co.,Ltd | Labor service | - | 10,058.85 |
| Anhui Lvyuan Ecological Agriculture Co.,Ltd | Sales of small materials | - | 14,258.21 |
| Total | —— | 10,307,366.90 | 22,318,714.38 |
| The lessee | Type of assets | 2020 | 2019 |
| Anhui Gujing Hotel Management Co., Ltd. | Buildings and constructions | 670,730.21 | 1,088,012.40 |
| Total | —— | 670,730.21 | 1,088,012.40 |
~ 242 ~
| The lessor | Type of assets | 2020 | 2019 |
| Anhui Gujing Group Co., Ltd. | Buildings and constructions | 1,850,265.66 | 1,799,774.91 |
| Nanjing Suning Real Estate Development Co., Ltd. | Buildings and constructions | 1,583,333.32 | - |
| Total | 3,433,598.98 | 1,799,774.91 |
| Items | 2020 | 2019 |
| Key management personnel compensation | 14,184,100.00 | 12,856,300.00 |
| Items | Related parties | 31 December 2020 | 31 December 2019 |
| Contract Liabilities | Anhui Gujing Health Industry Co., Ltd. | 658,339.50 | 6,625,624.40 |
| Contract Liabilities | Anhui Ruijing Business Travel (Group) Co., Ltd. | 342,484.96 | 913,047.40 |
| Contract Liabilities | Anhui Gujing International Development Co,.Ltd. | 186,083.60 | 1,038,479.00 |
| Contract Liabilities | Bozhou Gujing Huishenglou Catering Co., Ltd. | 15,300.00 | - |
| Contract Liabilities | Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | - | 490,292.90 |
| Contract Liabilities | Bozhou Ruineng Thermal Power Co., Ltd. | - | 2,883.84 |
| Contract Liabilities | Anhui Shenglong Commercial Co., Ltd. | - | 144,580.50 |
| Accounts Payable | Anhui Gujing Group Co., Ltd. | 4,804,012.50 | |
| Accounts | Anhui Haochidian Catering Co., Ltd. | 2,479,131.69 | - |
~ 243 ~
| Items | Related parties | 31 December 2020 | 31 December 2019 |
| Payable | |||
| Accounts Payable | Anhui Ruijing Business Travel (Group) Co., Ltd. | - | 147,120.00 |
| Other Payable | Anhui Gujing Group Co., Ltd. | 1,050,004.75 | |
| Other Payable | Anhui Ruijing Business Travel (Group) Co., Ltd. | 114,660.00 | 85,000.00 |
| Other Payable | Anhui Gujing Hotel Management Co., Ltd. | 100,000.00 | 50,000.00 |
| Other Payable | Dazhongyuan Wine Valley Culture Tourism Development Co., Ltd. | - | 50,000.00 |
| Other Payable | Anhui Shenglong Commercial Co., Ltd. | - | 4,300.00 |
| Other Payable | Anhui Gujing International Development Co,.Ltd. | - | 16,200.00 |
| Year | 2017 | 2018 | 2019 | 2020 | 2021 |
| Promised operating revenue (Tax inclusive) | 80,500.00 | 100,625.00 | 130,812.50 | 170,056.25 | 204,067.50 |
~ 244 ~
accordance with the agreement. If the net profit margin on sales of Yellow Crane TowerWine is less than 11% for two consecutive years, the transferor will have the right torepurchase all of the shares of Yellow Crane Tower held by the Company, and therepurchase price is CNY 816 million.The achievement of performance commitment in the separate financial statements ofYellow Crane Tower Wine for the year 2020 is as follows:
Unit: CNY 10,000
| Items | Actual number | Commitment number | Difference | Completion rate |
| Operating revenue (Tax inclusive) | 58,313.18 | 170,056.25 | -111,743.07 | 34.29% |
| Net profit | -1,171.75 | 16,554.15 | -17,725.90 | Loss |
| Net profit margin on sales | -2.27% | 11.00% | -13.27% | Loss |
| Term | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
| Promised operating revenue | 80,500.00 | 100,625.00 | 130,812.50 | —— | 170,056.25 | 204,067.50 |
~ 245 ~
(Tax inclusive)
(b) Regarding the target company’s commitment to net sales margin, net sales profit and
expected distributable profits, the evaluation period will be extended for one year afterthe supplementary agreement is signed, that is, the current year of 2020 will not beused as the operating indicator evaluation year, and it will be extended to 2021. 2021will be regarded as the fourth assessment year, and 2022 will be regarded as the fifthassessment year by analogy.(c) The two parties will not claim any compensation or pursue any other responsibilities tothe other party due to the performance in 2020.
11.2 Contingencies
As of 31
December 2020, The Company has no contingencies need to be disclosed.
12. EVENTS AFTER THE REPORTING PERIOD
12.1 On April 29, 2021, the seventh meeting of the ninth board of directors of the companydeliberated and approved the profit distribution plan for 2020. The Company plans to use the totalshare of 503,600,000.00 of the Company at 31 December 2020 as a base, to distribute CNY 1.50(before tax) for every share, and as a result to distribute CNY 755,400,000.00 to all shareholders.The income tax payable by all shareholders will be withheld and paid by the Company. The profitdistribution plan is pending the approval of the General Meeting of shareholders of the Company.
12.2 On April 29, 2021, the Issuance Review Committee of the China Securities RegulatoryCommission reviewed the Company's application for non-public stock issuance plan. theCompany's application for non-public issuance of shares was approved.
12.3 As of January 8, 2021, the Company's acquisition of 60% of Mingguang Liquor Co., Ltd. hascompleted the approval of the State-owned Capital Management Department and the registrationprocedures for industrial and commercial changes. 60% of the shares in Mingguang liquor industryhave been transferred to the company's name.
12.4 As of April 29, 2021, other than the above-mentioned matter, the Company has no other eventsafter the reporting period need to be disclosed
~ 246 ~
13. OTHER SIGNIFICANT MATTERS
Segment InformationThe Company did not determine the operating segment in accordance with the internalorganizational structure, management requirements, and internal reporting system, sothere was no need to disclose segment information report based on the operatingsegments.
14. NOTES TO THE MAIN ITEMS OF THE FINANCIAL STATEMENTS OF THE PARENTCOMPANY
14.1 Accounts Receivable
(a) Accounts receivable by aging
| Aging | 31 December 2020 | 31 December 2019 |
| Within one year | 494,976.27 | 218,558,555.07 |
| Including: 1-6months | 494,976.27 | 218,558,555.07 |
| 7-12months | - | - |
| 1-2 years | - | - |
| 2-3 years | - | - |
| Over 3 years | - | 141,121.87 |
| Subtotal | 494,976.27 | 218,699,676.94 |
| Less: provision for bad debt | 0.00 | 141,121.87 |
| Total | 494,976.27 | 218,558,555.07 |
| Category | 31 December 2020 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
~ 247 ~
| Category | 31 December 2020 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognized collectively | 494,976.27 | 100.00 | - | - | 494,976.27 |
| Including: Group1 | 494,976.27 | 100.00 | - | - | 494,976.27 |
| Group2 | - | - | - | - | - |
| Total | 494,976.27 | - | - | - | 494,976.27 |
| Category | 31 December 2019 | ||||
| Book balance | Provision for bad debt | Carrying amount | |||
| Amount | Proportion (%) | Amount | Provision ratio (%) | ||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognized collectively | 218,699,676.94 | 100.00 | 141,121.87 | 0.06 | 218,558,555.07 |
| Including: Group1 | 218,558,555.07 | 99.94 | - | - | 218,558,555.07 |
| Group2 | 141,121.87 | 0.06 | 141,121.87 | 100.00 | - |
| Total | 218,699,676.94 | 100.00 | 141,121.87 | 0.06 | 218,558,555.07 |
| Aging | 31 December 2020 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Related parties within the scope of consolidation | 494,976.27 | - | - |
| Total | 494,976.27 | - | - |
~ 248 ~
At 31 December 2020, accounts receivable with bad debt provision recognised collectively by group 2
| Aging | 31 December 2020 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Within one year | - | - | - |
| Including: 1-6months | - | - | - |
| 7-12months | - | - | - |
| 1-2 years | - | - | - |
| 2-3 years | - | - | - |
| Over 3 years | - | - | - |
| Total | - | - | - |
| Aging | 31 December 2019 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Related parties within the scope of consolidation | 218,558,555.07 | - | - |
| Total | 218,558,555.07 | - | - |
| Aging | 31 December 2019 | ||
| Accounts receivable | Provision for bad debt | Provision ratio (%) | |
| Within one year | |||
| Including: 1-6months | - | - | - |
| 7-12months | - | - | - |
| 1-2 years | - | - | - |
| 2-3 years | - | - | - |
| Over 3 years | 141,121.87 | 141,121.87 | 100.00 |
| Total | 141,121.87 | 141,121.87 | 100.00 |
~ 249 ~
(c) Changes of provision for bad debt during the reporting period
| Category | 31 December 2019 | Changes during the reporting period | 31 December 2020 | ||
| Provision | Recovery or reversal | Write-off | |||
| Provision for bad debt recognised individually | - | - | - | - | - |
| Provision for bad debt recognized collectively | 141,121.87 | -141,121.87 | - | - | - |
| Total | 141,121.87 | -141,121.87 | - | - | - |
| Entity name | Balance at 31 December 2020 | Proportion of the balance to the total accounts receivable (%) | Provision for bad debt |
| Entity 1 | 494,976.27 | 100.00 | - |
| Entity 2 | - | - | - |
| Entity 3 | - | - | - |
| Entity 4 | - | - | - |
| Entity 5 | - | - | - |
| Total | 494,976.27 | 100.00 | - |
| Items | 31 December 2020 | 31 December 2019 |
| Interest receivable | - | 301,888.89 |
| Dividend receivable | - | - |
| Other receivables | 141,378,010.40 | 124,917,324.95 |
| Total | 141,378,010.40 | 125,219,213.84 |
~ 250 ~
| Items | 31 December 2020 | 31 December 2019 |
| Interest on certificates of deposit | - | 301,888.89 |
| Less: provision for bad debts | - | - |
| Total | - | 301,888.89 |
| Aging | 31 December 2020 | 31 December 2019 |
| Within one year | 140,143,887.64 | 64,773,476.22 |
| Including:1-6months | 139,805,782.01 | 50,595,906.92 |
| 7-12months | 338,105.63 | 14,177,569.30 |
| 1-2 years | 1,322,306.20 | 59,983,186.13 |
| 2-3 years | 244,089.00 | 525,794.00 |
| Over 3 years | 41,333,188.41 | 41,540,607.44 |
| Subtotal | 183,043,471.25 | 166,823,063.79 |
| Less: provision for bad debt | 41,665,460.85 | 41,905,738.84 |
| Total | 141,378,010.40 | 124,917,324.95 |
| Nature | 31 December 2020 | 31 December 2019 |
| Related parties within the scope of consolidation | 133,696,578.89 | 120,200,301.28 |
| Security investment | 40,807,394.41 | 40,850,949.35 |
| Security deposit and guarantee | 1,879,230.29 | 1,850,139.09 |
| Rent, water, electricity and gas | 1,275,238.93 | 853,843.90 |
| Others | 5,385,028.73 | 3,067,830.17 |
| Total | 183,043,471.25 | 166,823,063.79 |
~ 251 ~
| Stages | Book balance | Provision for bad debt | Book value |
| Stage 1 | 142,236,076.84 | 858,066.44 | 141,378,010.40 |
| Stage 2 | - | - | - |
| Stage 3 | 40,807,394.41 | 40,807,394.41 | - |
| Total | 183,043,471.25 | 41,665,460.85 | 141,378,010.40 |
| Category | Book balance | 12-month expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | - | - | - | - |
| Provision for bad debt recognized collectively | 142,236,076.84 | 0.60 | 858,066.44 | 141,378,010.40 |
| Including: Group1 | 133,696,578.89 | - | - | 133,696,578.89 |
| Group2 | 8,539,497.95 | 10.05 | 858,066.44 | 7,681,431.51 |
| Total | 142,236,076.84 | 0.60 | 858,066.44 | 141,378,010.40 |
| Aging | 31 December 2020 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Within one year | 6,447,308.75 | 77,997.31 | 1.21 |
| Including:1-6months | 6,109,203.12 | 61,092.03 | 1.00 |
| 7-12months | 338,105.63 | 16,905.28 | 5.00 |
| 1-2 years | 1,322,306.20 | 132,230.63 | 10.00 |
| 2-3 years | 244,089.00 | 122,044.50 | 50.00 |
| Over 3 years | 525,794.00 | 525,794.00 | 100.00 |
| Total | 8,539,497.95 | 858,066.44 | 10.05 |
~ 252 ~
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | 40,807,394.41 | 100.00 | 40,807,394.41 | 0.00 |
| Provision for bad debt recognized collectively | - | - | - | - |
| Including: Group1 | - | - | - | - |
| Group2 | - | - | - | - |
| Total | 40,807,394.41 | 100.00 | 40,807,394.41 | 0.00 |
| Entity name | 31 December 2020 | |||
| Book balance | Provision for bad debt | Provision ratio (%) | Reason | |
| Hengxin securities Co., Ltd. | 28,966,894.41 | 28,966,894.41 | 100.00 | Enterprise enters the bankruptcy liquidation procedure |
| Jianqiao securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | Enterprise enters the bankruptcy liquidation procedure |
| Total | 40,807,394.41 | 40,807,394.41 | 100.00 | |
| Stages | Book balance | Provision for bad debt | Book value |
| Stage 1 | 125,972,114.44 | 1,054,789.49 | 124,917,324.95 |
| Stage 2 | - | - | - |
| Stage 3 | 40,850,949.35 | 40,850,949.35 | - |
| Total | 166,823,063.79 | 41,905,738.84 | 124,917,324.95 |
~ 253 ~
| Category | Book balance | 12-month expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | - | - | - | - |
| Provision for bad debt recognized collectively | 125,972,114.44 | 0.84 | 1,054,789.49 | 124,917,324.95 |
| Including: Group1 | 120,200,301.28 | - | - | 120,200,301.28 |
| Group2 | 5,771,813.16 | 18.27 | 1,054,789.49 | 4,717,023.67 |
| Total | 125,972,114.44 | 0.84 | 1,054,789.49 | 124,917,324.95 |
| Aging | 31 December 2019 | ||
| Book balance | Provision for bad debt | Provision ratio (%) | |
| Within one year | 4,312,272.07 | 77,825.50 | 1.80 |
| Including: 1-6months | 3,444,702.77 | 34,447.03 | 1.00 |
| 7-12months | 867,569.30 | 43,378.47 | 5.00 |
| 1-2 years | 244,089.00 | 24,408.90 | 10.00 |
| 2-3 years | 525,794.00 | 262,897.00 | 50.00 |
| Over 3 years | 689,658.09 | 689,658.09 | 100.00 |
| Total | 5,771,813.16 | 1,054,789.49 | 18.27 |
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Provision for bad debt recognised individually | 40,850,949.35 | 100 | 40,850,949.35 | - |
| Provision for bad debt recognized collectively | - | - | - | - |
~ 254 ~
| Category | Book balance | Lifetime expected credit losses rate (%) | Provision for bad debt | Carrying amount |
| Including: Group1 | - | - | - | - |
| Group2 | - | - | - | - |
| Total | 40,850,949.35 | 100 | 40,850,949.35 | - |
| Entity Name | 31 December 2019 | |||
| Book balance | Provision for bad debt | Provision ratio (%) | Reason | |
| Hengxin securities Co., Ltd. | 29,010,449.35 | 29,010,449.35 | 100.00 | Enterprise enters the bankruptcy liquidation procedure |
| Jianqiao securities Co., Ltd. | 11,840,500.00 | 11,840,500.00 | 100.00 | Enterprise enters the bankruptcy liquidation procedure |
| Total | 40,850,949.35 | 40,850,949.35 | - | - |
| Category | 31 December 2019 | Changes during the reporting period | 31 December 2020 | ||
| Provision | Recovery or reversal | Write-off | |||
| Provision for bad debt recognised individually | 40,850,949.35 | - | 43,554.94 | - | 40,807,394.41 |
| Provision for bad debt recognized collectively | 1,054,789.49 | - | 196,723.05 | - | 858,066.44 |
| Total | 41,905,738.84 | - | 240,277.99 | - | 41,665,460.85 |
~ 255 ~
| Entity name | Nature | Balance at 31 December 2020 | Aging | Proportion of the balance to the total other receivables (%) | Provision for bad debt |
| Entity1 | Related party within the scope of consolidation | 85,361,073.03 | Within one year | 46.63 | - |
| Entity2 | Related party within the scope of consolidation | 47,469,478.21 | Within one year | 25.93 | - |
| Entity3 | Security Investment | 28,966,894.41 | Over 3 years | 15.83 | 28,966,894.41 |
| Entity4 | Security Investment | 11,840,500.00 | Over 3 years | 6.47 | 11,840,500.00 |
| Entity5 | Others | 2,000,000.00 | Over 3 years | 1.09 | 20,000.00 |
| Total | —— | 175,637,945.65 | —— | 95.95 | 40,827,394.41 |
| Items | 31 December 2020 | 31 December 2019 | ||||
| Book balance | Provision for impairment | Carrying amount | Book balance | Provision for impairment | Carrying amount | |
| Subsidiaries | 1,118,213,665.32 | - | 1,118,213,665.32 | 1,148,213,665.32 | - | 1,148,213,665.32 |
| Total | 1,118,213,665.32 | - | 1,118,213,665.32 | 1,148,213,665.32 | - | 1,148,213,665.32 |
| Investees | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | Provision for impairment during the reporting period | Provision for impairment at 31 December 2020 |
| Bozhou Gujing | 68,949,286.89 | - | - | 68,949,286.89 | - | - |
~ 256 ~
| Investees | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | Provision for impairment during the reporting period | Provision for impairment at 31 December 2020 |
| Sales Co., Ltd. | ||||||
| Anhui Longrui Glass Co., Ltd | 85,267,453.06 | - | - | 85,267,453.06 | - | - |
| Shanghai Gujing Jinhao Hotel Management Co., Ltd. | 49,906,854.63 | - | - | 49,906,854.63 | - | - |
| Bozhou Gujing Hotel Co., Ltd. | 648,646.80 | - | - | 648,646.80 | - | - |
| Anhui Ruisiweier Technology Co., Ltd | 40,000,000.00 | - | - | 40,000,000.00 | - | - |
| Anhui Baiweilu Liquor Co., Ltd. | 30,000,000.00 | 30,000,000.00 | - | |||
| Anhui Yuanqing Environmental Protection Co., Ltd. | 16,000,000.00 | - | - | 16,000,000.00 | - | - |
| Anhui Gujing Yunshang Electronic Commerce Co., Ltd. | 5,000,000.00 | - | - | 5,000,000.00 | - | - |
| Anhui Zhenrui Construction Engineering Co., Ltd | 10,000,000.00 | - | - | 10,000,000.00 | - | - |
| Yellow Crane | 816,000,000.00 | - | - | 816,000,000.00 | - | - |
~ 257 ~
| Investees | 31 December 2019 | Increase during the reporting period | Decrease during the reporting period | 31 December 2020 | Provision for impairment during the reporting period | Provision for impairment at 31 December 2020 |
| Tower Wine Co., Ltd | ||||||
| Anhui Jinyunlai Culture & Media Co., Ltd. (hereafter Jinyunlai) | 15,000,000.00 | - | - | 15,000,000.00 | - | - |
| Bozhou Gujing Waste Recycling Co., Ltd. | 1,441,423.94 | - | - | 1,441,423.94 | - | - |
| Anhui Runanxinke Testing Technology Co., Ltd. | 10,000,000.00 | - | - | 10,000,000.00 | - | - |
| Total | 1,148,213,665.32 | - | 30,000,000.00 | 1,118,213,665.32 | - | - |
| Items | 2020 | 2019 | ||
| Revenue | Costs of sales | Revenue | Costs of sales | |
| Principal activities | 5,806,187,227.99 | 2,359,384,925.04 | 5,485,034,001.70 | 2,217,395,489.41 |
| Other activities | 73,180,067.75 | 45,385,582.08 | 79,861,568.03 | 51,860,608.37 |
| Total | 5,879,367,295.74 | 2,404,770,507.12 | 5,564,895,569.73 | 2,269,256,097.78 |
| Items | 2020 | 2019 |
| Investment income from long-term equity investments under cost method | 707,487,107.56 | 770,000,042.30 |
| Gains on disposal of financial assets at fair value through | - | - |
~ 258 ~
| Items | 2020 | 2019 |
| profit or loss | ||
| Interest income from debt investment during the holding period | - | - |
| Interest income from other debt investment during the holding period | - | - |
| Gains on disposal of financial assets measured at fair value and changes are included into other comprehensive income | -34,762,044.63 | - |
| Investment income from held-for-trading financial assets during the holding period | 30,570,930.80 | 76,168,001.78 |
| Others | - | - |
| Total | 703,295,993.73 | 846,168,044.08 |
| Items | 2020 | 2019 | Description |
| Gains /(losses) on disposal of non-current assets | -3,692,640.09 | -7,615,741.56 | |
| Government grants recognised in current profit or loss (except government grants that is closely related to operations and determined based on a fixed scale according to the national unified standard) | 48,617,479.37 | 98,293,177.32 | |
| Gains /(losses) arising from changes in fair value of held-for-trading financial assets, derivative financial assets, held-for-trading financial liabilities and derivative financial liabilities during the holding period and investment income arising from disposal of held-for-trading financial assets, derivative financial assets, held-for-trading | 21,490,043.05 | 144,234,319.52 |
~ 259 ~
| Items | 2020 | 2019 | Description |
| financial liabilities, derivative financial liabilities and other debt investment except effective hedging transactions related to the Company's principal activities | |||
| Reversal of provision for bad debt recognised individually | 43,554.94 | - | |
| Other non-operating income/expenses except for items mentioned above | 44,100,616.61 | 57,215,092.96 | |
| Other extraordinary gains/(losses) defined | - | - | |
| Total extraordinary gains/(losses) | 110,559,053.88 | 292,126,848.24 | |
| Less: tax effect | 27,033,395.22 | 71,418,613.38 | |
| Less: net extraordinary gains/(losses) attributable to non-controlling interest | 1,960,716.42 | 14,277,652.37 | |
| Net extraordinary gains/(losses) attributable to ordinary shareholders | 81,564,942.24 | 206,430,582.49 |
| Profit for the reporting period | Weighted average return on net assets (%) | EPS | |
| Basic | Diluted | ||
| Net profit attributable to ordinary shareholders | 19.53 | 3.68 | 3.68 |
| Net profit attributable to ordinary shareholders after extraordinary gains and losses | 18.68 | 3.52 | 3.52 |
| Profit for the reporting period | Weighted average return on net assets (%) | EPS | |
| Basic | Diluted | ||
~ 260 ~
| Profit for the reporting period | Weighted average return on net assets (%) | EPS | |
| Basic | Diluted | ||
| Net profit attributable to ordinary shareholders | 25.55 | 4.17 | 4.17 |
| Net profit attributable to ordinary shareholders after extraordinary gains and losses | 23.03 | 3.76 | 3.76 |
~ 261 ~
Part XIII Documents Available for Reference(I) The financial statements carrying the signatures and stamps of the Company’slegal representative, Chief Accountant and head of the accounting department;(II) The original copy of the Independent Auditor's Report stamped by the CPA firmas well as signed and stamped by the engagement certified public accountants;(III) The originals of all the Company’s announcements and documents disclosed onmedia designated by the China Securities Regulatory Commission during theReporting Period; and(IV) The annual report disclosed in other securities markets.
Chairman of the Board:
(Liang Jinhui)Anhui Gujing Distillery Company Limited
29 April 2021